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TMI Blog2001 (8) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... pany engaged in handicraft export business. On17th Nov., 1995, a search under s. 132 was conducted on the assessee-company's business premises at S11, Green Park Extension,New Delhiand also at the residence of its director at X25, Hauz Khas New Delhi. During the course of this search and seizure operations, one of the documents (Annexure A-11) found at the aforesaid business premises inter alia contained a note, in tabular form, to the following effect: --------------------------------------------------------- From CT. Dated @ Amount Paid (1) (2) (3) (4) (5) (6) --------------------------------------------------------- Rs. Rs. Rs. --------------------------------------------------------- Nalin 20.04 29-11-1994 9,000 1,80,360.00 1,75,000 " 64.95 6-12-1994 16,350 10,61,932.50 10,62,000 " 17.73 7-12-1994 14,201 2,51,783.73 95,000 1,50,000 6,784 ------------ --------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficance in context of business carried by assessee. It is usual for person learning basis operation to work or practice in existing file of computer. The practice files worked on by learners should not lead to unimaginable queries. The above fact can also be verified from practice book of Apple Information Technology which was lying in the office at that time. Moreover these entries do not pertain to any business transactions which have nowhere been signed or confirmed by the assessee." The AO was not satisfied with the above explanation and, accordingly, he sought further explanation from the assessee. He also mentioned to the assessee that in terms of provisions of s. 132(4A) of the IT Act, 1961, the presumption is that the contents of such documents, as may be found in possession of the assessee, are deemed to be true. The assessee broadly reiterated his earlier submissions and enclosed an affidavit from Shri Himanshu Jain, accountant of the assessee, in support of assessee's stand. The AO rejected these arguments of the assessee and, although a little later in the impugned assessment order, observed as follows: "The contention of the assessee that the above entries were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed to have stayed in, even the dates of his visit toDelhi, and the date of his visiting the assessee's office. Shri Goenka went to state on oath that "after each transaction I tear off the pieces of paper (evidence in transactions) so that my (recorded) income will be below the taxable limit." Shri Ved Prakash, director of the assessee-company, was all along present but he did not avail specific opportunity, offered to him by the AO, to cross examine Shri Goenka. On the same day and during the course of this very hearing, Shri Ved Prakash was also examined on oath and the AO recorded his statement also. In response to AO's question as to how the assessee suddenly deviated from the stand that entries in question were the outcome of accountant's practice sessions only, it was submitted that Shri Gupta had initially, suspected that his accountant had typed out these things while practicing on computer, and that mistake was discovered only when he got in touch with Shri Babulal who explained the actual facts. In the backdrop of these facts, the AO came to the conclusion that "even this version of the assessee should only be treated as last desperate measure to evade the responsibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d separately in the hands of the following assessees Friends Overseas 43,382 Intraco India 60,044 Ved Prakash Sons HUF 36,411 1,39,837 ------ -------- Balance amount remaining unexplained 3,12,784 -------- 9. Aggrieved by these two additions amounting to Rs. 14,88,784 and Rs. 3,12,784 respectively, the assessee is in first appeal before us. 10. Rival contentions are conscientiously heard, orders of the authorities below carefully perused, and applicable legal positions duly deliberated upon. 11. It has been pointed out that the search was conducted in respect of, as observed by AO himself in the impugned assessment order, in 'Friends Group of cases' which consisted of (i) Friends Overseas (P) Ltd., (ii) Friends Overseas, (iii) Intraco India, (iv) Ved Prakash Sons HUF, (v) Ved Prakash Gupta, (vi) Ashvin Gupta, (vii) Sanjay Gupta and (viii) Saroj Gupta. We have also noticed that Panchnama dt.18th Nov., 1995, in the case on Shri Ved Prakash, Shri Sanjay Gupta, Shri Ashvin Gupta and Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve these particulars to Himanshu Jain to get it typed on the computer and give its printout back to him." This letter further stated that, "The nature, particulars, significance of various columns of above page is given by Shri Babulal ji in his personal statement (enclosed herewith)." In the accompanying written statement, forwarded by the assessee-company itself, Shri Babu Lal inter alia stated that, "That all the transactions as stated above and appearing in seized documents of my son-in-law's company Friends Overseas (P) Ltd. pertain to me only and nowhere belongs to M/s Friends Overseas (P) Ltd.". This explanation was given in the presence of Shri Ved Prakash and, as duly noted on the statement recorded by the AO, that "Cross-examination was denied by Shri Ved Prakash who thought it was not necessary-Sd/xx (Ved Prakash)". Shri Babu Lal, in this statement, was on record to say that the entries were made by the accountant of the company, though based on inputs supplied by this Shri Babu Lal. We may also reproduce the affidavit dt. 14th Nov., 1996, filed by Shri Ved Prakash, in his capacity as director of the assessee-company; I, Ved Prakash S/o Late Shri Bishan Chand, director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's case is that these entries were not relevant to the business of the assessee and, in support of this stand, the assessee has offered certain explanations which have been rejected, for the detailed reasons set out in the impugned assessment order, by the AO. Unlike a real person, a company does not have the physical existence but a document found in its business premises though with one of its directors, through whom the company functions, can be reasonably said to have been seized from the company, particularly when such a director does not dispute that the document does not belong to the company and his dispute is confined to the claim that some of the entries as not related to the assessee-company. In the case before us, it is an admitted fact that entries in dispute were actually made by an employee of the company. In view of these peculiar facts, we see no substance in the technical objection of the assessee-company that the Annexure A-11 is not relevant to the assessee and that the AO, for this reason alone, should not have made addition in the hands of the assessee-company. The assessee-company, through its director, has already made a sworn statement that the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to type the above transactions arid give the printout back to Shri Goenka. The stand of the assessee was that since these entries are now admitted and explained by the aforesaid Shri Goenka, no adverse inference need be taken in the hands of the assessee-company. 15. We may first reproduce some of the AO's questions and replies thereto by Shri Goenka, as recorded in his statement on26th Nov., 1996. Q. No. 5. Have you ever undertaken any other trading of diamonds etc. apart from this one occasion? Ans. No. This transaction was done by me on commission basis. I have not done any such transaction again or before. Q. No. 9. To whom did you sell the diamonds? Ans. I do not remember their names as the matter is already two years old, Q. No. 15. You have just stated that you did kind of transaction only once is your lifetime, but in your letter of26th Nov., 1996, your have stated that it was a hereditary and ancestral business of yours. Please explain. Ans. I had never done such big deals ever. However, I have done many small transactions of Rs, 5,000 to Rs. 10,000 at a commission of 1 per cent thereof. Q. No. 17. Do you maintain any books for this kind of small or big t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pected that my accountant, who was learning, could have typed out these things which he was practicing on the computer. Later on I discover the name of Babulal ji and on contacting him I found out the truth." 17. We may, in this regard, refer to the dictum known as 'falsus in uno, falsus in omnibus' (false in one thing, false in everything) which has been referred to, with approval, by the Hon'ble Calcutta in the case of Amal Kumar Chakraborty vs. CIT (1994) 207 ITR 376 (Cal). In this case, Hon'ble Calcutta High Court has observed that, "Here, we go by the dictum 'falsus in uno, falsus in omnibus'. Though applicable in criminal law, it is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of witness and their judicial evaluation. It is seen that in 1975, the assessee gave a false statement by stating that he had no connection with the bank deposits. Later, he makes a volte face and says that the deposits are from money supposedly declared in 1971. Therefore, the later statements of the assessee could not be held to be credible as the source of deposits." It is clear that, in the present case also, the assessee-company has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the co-ordinate benches in the cases of Ved Prakash Sanjay Kumai vs. Asstt. CIT (2000) 66 TTJ (Chd) 442 and Suman Dhanji Zalte vs. Asstt. CIT (2000) 68 TTJ (Pune) 273 are concerned, these cases pertain to the proceedings under s. 158BD and, accordingly, ratio of these cases has no application in assessment under s. 158BC which is impugned in appeal before us. It cannot be in dispute that where search has been conducted under s. 132, the block assessment is to be completed under s. 158BC of the Act, The question of AO's satisfaction, for the purposes of s. 158BD, is only applicable for the cases where the undisclosed income belongs to a person other than the person with respect to whom search under s, 132 was made. Since, in the case before us, search was conducted on the assessee-company, we are of the considered view that learned counsel's submissions about AO's satisfaction as a pre-requisite for assessment are not really relevant. The learned counsel has referred to a large number of cases in support of the proposition that loose papers have no evidentiary value and that no additions can be made on the basis of such papers unless there is some corroborative evidence but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o statutory presumption under s. 132(4A) of the IT Act. 20. In view of our above finding that the explanations given by the assessee-company, about the entries in Annexure A-11 extracted in para 2 of this order, are not satisfactory, and in view of the presumption under s. 132(4A) of the IT Act, we support the AO's action of making an addition of Rs. 14,88,754 on account of unexplained expenditure. 21. We now take up the addition of Rs. 3,12,784 made by the AO on account of 'unexplained cash' found at the time of search. One of the pleas of the learned counsel of the assessee is that the above addition does not take into account the additions separately made in the hands of other block assessees, on account of cash found from the assessee-company's premises and claimed to be belonging to these block assessees. It is submitted that, as a result of the above lapse, double additions are made in the hands of the block assessees. Our attention is also invited to the appellate orders in the case of some of the block assessees where such double additions have been made. Having heard learned Departmental Representative on this aspect of the matter, we deem it fit and proper to restore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part in to First Schedule". It is thus clear that the legislature clearly intended applicability of surcharge even on tax computed under s. 113 of the IT Act. In this view of the matter, we see no substance in submissions of the assessee and, accordingly, reject the same. 24. Accordingly, assessee's ground of appeal against levy of surcharge, on income-tax computed under s. 113, is dismissed. 25. The assessee has also taken a plea that the block assessment under s. 158 BC is not valid as the same is not on the basis of any document seized from the assessee-company and if any other information is used and applied, the assessment has to be made under s. 158BD after AO's recording reasons and arriving at the satisfaction as per mandate of s. 158BD. As we have already held that seized documents admittedly belonged to the company and were processed by its employees, we see no substance in this plea. In any case, once a search under s. 132 is conducted on the assessee-company, assessment under s. 158BC is to be framed and s. 158BD has no application in the matter. We, therefore, see no substance in this ground of appeal also. 26. In the result, the appeal is partly allowed for stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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