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2013 (11) TMI 56 - AT - Income TaxUndisclosed income (investment) Invocation of section 69 of the Income tax act - Observation of the AO was that as per the seized material marked as Annexure A-1 there was a diary and on page 01 of the said diary there was a payment of Rs.10.10 lacs with regard to land situated near Anjali Cinema. It was found that the payment was made to Sri Govind Bhai Patel - According to AO even before ADI in a statement the assessee had once again reiterated his disclosure of the said investment in the land. The assessee had objected the addition on the ground that although the payment was recorded but the said deal was cancelled in respect of the said land. Since the deal was not materialized therefore according to assessee the entire amount was refunded back by Mr. Patel Held that - As per the diary found at the time of search it was mentioned that a payment of Rs.10.10 lac was made in respect of the land therefore it was required to be assessed in the hands of the assessee. According to AO there was no recording of receiving the money back from the said party. The AO has further distinguish that in respect of other parties whenever the amount was received back then an entry to that effect was recorded in the diary. The assessee had informed that the money was paid near October / November 1994 which was received back around March /April 1995. But according to AO till the date of search i.e. on 21.9.1995 there was no entry of receiving the money back recorded in the seized diary. In the absence of proper proof the AO had taxed the said sum as undisclosed income in the hands of the assessee. Assessee has not furnished any evidence which can fully substantiate that in fact assessee had received the amount back from the said party. This submission being not supported by any cogent evidence therefore not inclined to interfere with the findings of the lower authority - In view of Section 132(4) the presumption in that whatever recorded in the seized books is truly recorded. Validity of affidavits in the taxation matters - Assessee had furnished affidavits of both those persons before the AO. In the said affidavit they have only confirmed that in total a friendly loan of Rs.8, 000/- was taken for a short period from the assessee Held that - Affidavits were nothing but self serving document hence cannot be relied upon in tax proceedings specially when there is no independent corroborative evidence Decided against the Assessee. Adjustment regarding the amount declared u/s 158 BC Held that - Regarding adjustment of Rs.5, 60, 000/- being the amount declared u/s 158 BC is concerned already the claim of the assessee is that he had already declared Rs.5, 60, 000/- As undisclosed income in the return; stated to be representing investment in shares - Nature of disclosure in the said return is required to be ascertained first and if it is found correct then the AO is free to allow the adjustment. Appropriation out of cash seized u/s 132 of the Income Tax Act Held that - On this issue grievance should not have been made because it pertains to administrative decision of the Revenue Authorities as prescribed u/s. 132B(1)(i) of the Act. This section prescribed that the assets seized u/s. 132 may be dealt with in the manner laid down i.e. in the event of any existing liability or the amount of liability determined on completion of assessment under Chapter XIV- B for the Block-period then the said liability may be recovered out of such assets - AO is otherwise empowered by the Act itself to grant such adjustment against the cash seized This ground allowed Decided in favor of Assessee.
Issues Involved:
1. Legality of the Assessing Officer's order. 2. Compliance with ITAT directions. 3. Opportunity of being heard. 4. Method of accounting. 5. Addition of undisclosed income for investment in land. 6. Addition of undisclosed income for payment towards land. 7. Addition of unaccounted investment in loans/advances. 8. Addition of unaccounted investment in shares/debentures. 9. Addition for foreign tour expenses. 10. Addition of unaccounted investment in shares. 11. Addition for unaccounted household expenses. 12. Double addition in final computation. 13. Set off of undisclosed income against firm's income. 14. General grievance on total undisclosed income. 15. Appropriation of cash seized during proceedings. Detailed Analysis: 1. Legality of the Assessing Officer's Order: The Assessee claimed that the order passed by the Assessing Officer (AO) was contrary to law and facts, and should be cancelled or modified. However, these grounds were not pressed by the Assessee's representative and were therefore dismissed. 2. Compliance with ITAT Directions: The Assessee argued that the AO framed the order without following the directions of the Income Tax Appellate Tribunal (ITAT). The Tribunal noted that these grounds were general in nature and were not pressed, leading to their dismissal. 3. Opportunity of Being Heard: The Assessee contended that the assessment was made without affording a reasonable opportunity of being heard and without providing necessary materials. The Tribunal dismissed these grounds as they were not pressed. 4. Method of Accounting: The AO observed that the Assessee followed the mercantile system of accounting, which the Assessee disputed, claiming to follow the cash system. The Tribunal found that the assessment was based on the cash system and dismissed this ground as redundant. 5. Addition of Undisclosed Income for Investment in Land: The AO added Rs.2,35,000/- as undisclosed income for investment in land. The Assessee claimed that Rs.20,000/- was returned, making the net investment Rs.2,15,000/-. The Tribunal found no evidence to support the Assessee's claim and upheld the AO's addition. 6. Addition of Undisclosed Income for Payment Towards Land: The AO added Rs.10,60,000/- as undisclosed income for payment towards land. The Assessee claimed the amount was received back, but the Tribunal found no evidence and upheld the AO's addition. 7. Addition of Unaccounted Investment in Loans/Advances: The AO added Rs.1,70,000/- for unaccounted loans/advances based on a seized diary. The Assessee claimed the actual amount was Rs.8,000/-. The Tribunal found the affidavits provided by the Assessee unreliable and upheld the AO's addition. 8. Addition of Unaccounted Investment in Shares/Debentures: The AO added Rs.10,05,925/- for unaccounted investment in shares. The Assessee provided explanations for part of the amount, including a totaling error and shares recorded in books. The Tribunal allowed partial relief subject to verification by the AO. 9. Addition for Foreign Tour Expenses: The AO added Rs.1,00,000/- for expenses incurred during foreign tours. The Tribunal found no evidence to support the AO's estimation and directed the deletion of this addition. 10. Addition of Unaccounted Investment in Shares: The AO added Rs.10,75,000/- for unaccounted investment in shares based on a seized diary. The Assessee's explanations were not accepted by the Tribunal, which restored the matter to the AO for verification of potential double taxation. 11. Addition for Unaccounted Household Expenses: The AO estimated and added Rs.4,80,000/- for unaccounted household expenses. The Tribunal found the addition to be based on estimation without evidence and directed its deletion. 12. Double Addition in Final Computation: The Assessee claimed Rs.15,24,274/- was included twice in the final computation. The Tribunal noted this could be rectified under Section 154 of the IT Act and dismissed the ground, subject to rectification by the AO. 13. Set Off of Undisclosed Income Against Firm's Income: The AO allowed partial set off of the Assessee's share of undisclosed income from firms. The Tribunal directed the AO to verify the final undisclosed income of the firms and allow appropriate set off. 14. General Grievance on Total Undisclosed Income: The Assessee's general grievance on the total undisclosed income assessed at Rs.52,28,640/- was not pressed and therefore dismissed. 15. Appropriation of Cash Seized During Proceedings: The Assessee sought credit for cash seized during proceedings. The Tribunal directed the AO to grant adjustment against the cash seized as prescribed under Section 132B(1)(i) of the Act. Conclusion: The appeal was partly allowed, with specific directions for verification and adjustment by the AO on certain grounds.
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