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TMI Blog1986 (9) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, undisclosed income at Rs. 3,68,562 was added in the hands of the assessee after detailed discussion over the various items recovered at the time of search which consisted of tangible items such as jewellery and also some papers showing investments. Most of these additions have been deleted or drastically reduced by the Commissioner (Appeals) on an appeal filed by the assessee. The department has, therefore, come up in second appeal before us objecting to the following deletions and reliefs : (i) deleting the addition of Rs. 55,000 made by the ITO on account of unexplained investment in one piece of diamond, (ii) deleting the addition of Rs. 1,13,050 made by the ITO on account of unexplained investment in certain diamonds, (iii) deleting the addition of Rs. 3,300 made as unexplained investment in 'Panna Mix', (iv) deleting the addition of Rs. 40,000 made on account of unexplained investment in 4 gold 'Gokhrus', (v) reducing the addition of Rs. 37,210 on account of unexplained investment in Emeralds, to Rs. 8,902 only, and (vi) holding that addition of Rs. 83,858 (Rs. 8,155+9,815+53,988+ 12,000) made on the basis of some loose papers are not permissible under the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals is one of fact, namely, as to how for the statements made by Shri Dhanraj Dugar on 29-5-1979, 31-5-1979 and 1-6-1979 could be binding upon the assessee-HUF. In these statements Shri Dhanraj Dugar clearly admitted that he had purchased/secured most of these items from his undisclosed income. For example, in the statement dated 29-5-1979, it has been conceded that he purchased certain packets containing diamonds during the last two months. He did not have a bill or cash memo. Some of these items were purchased from Bombay and Jaipur. An amount of Rs. 35,000 was spent from unaccounted money lying with him. Another Rs. 10,000 unaccounted money was lying at his residence. Further, diamonds valuing at Rs. 55,000 had been purchased about 516 days back from the local market at Jaipur which were found in a registered parcel meant to be sent to Tikamlal Nihal Chand, Bombay and insured for Rs. 3,000 only. In the subsequent statement dated 31-5-1979 he, further stated that item No. 14 consisting of 'Gokhrus' found in the iron safe belonged to his father regarding which he could not duly satisfy the income-tax authorities. There is a third statement of Shri Dhanraj Dugar recorded on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the end of the search each day. However, in the present case unfortunately for the department we find that there are serious discrepancies between the panchnamas as prepared, the statements as recorded and the report of search as given to the authorities by the search party. For example, the first date of search is 29-5-1979. Paragraph 4 deals with the articles found at the premises and the articles of which possession was taken by the search party. A reading thereof would show that no jewellery or any other articles or books or documents were mentioned to have been found at the premises. Clause (c) only mention that some books of account and documents as per Annexure-I consisting of 3 pages were taken possession of. Even clause (d) which relates to valuable articles and things including cash does not refer to the taking possession of a single such article. It is not that the panchnama is not detailed because wherever necessary columns have been filled in and some additions have also been made in the right hand side of the panchnama where the space was rather insufficient, Of course, it is mentioned that the search was still going on. But this would at least show that on that day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er panches were called again or the panchnama was not prepared according to the statement. When in the statement, Shri Dhanraj Dugar had clearly stated that he had secured some valuables from unaccounted money, it is difficult to believe that these articles should not have been noted in the panchnama and it is also not sure as to whereafter they were kept. They would not ordinarily be returned to Shri Dhanraj Dugar but would be kept in safe custody but then the panchnama does not refer to seizure of any such article. These things, therefore, create some sort of suspicion on the regularity of the proceedings conducted at the time of search. 4. There was again a panchnama prepared on 30-5-1979 in which again it has been mentioned that no books of account and documents were found at the premises. Some articles or things including money were found but not seized under clause (c) it is mentioned that some books of account and documents were found and taken possession of. Again it has not been mentioned that any articles were even seized that day. Then there is the panchnama dated 31-5-1979. It, of course, mentions that several articles mentioned in Annexures 'F' (not seized) 'Q', 'R', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked him to take them to Shri Dhanraj Dugar posing themselves as his acquaintances. They did not disclose him their identity. That person was one of the employees of Shri Dhanraj Dugar and after crossing a number of lanes be took them to one building known as 'Chandan Mahal', Chaura Rasta which was under renovation. There they found Shri Dhanraj Dugar sitting in a room and asked him to accompany him to the house. After knowing their identity and purpose, he avoided accompanying them under the plea that he had an urgent appointment with Shri Bhim Singh. Then there were telephonic enquiries revealing that Shri Bhim Singh was on that day away to Udaipur. Then Shri Dhanraj Dugar agreed to accompany them to his house. He kept them awaiting for about half an hour under one pretext or the other and visited his godown and the premises of his tenants. He gave them a feeling as if he wanted to part with something with him. They, however, brought him to a house where again after a lot of discussion, arguments, persuasion and pressure, he signed the search warrants which had already been shown to his younger son. Thereafter, with the approval of Shri E. Saroj, they took Shri Dhanraj Dugar to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er which was recorded by higher income-tax authorities under proper orders in accordance with law. In all, the subsequent statement of Shri Dhanraj Dugar denied having made the earlier statement with his free will. Thus, the sanctity of the original proceedings became rather suspicious. 6. A third important thing to note in this behalf is that the additions are being made in the hands of an HUF consisting of Shri Dhanraj Dugar and other members of the family. Even if the statement of Shri Dhanraj Dugar made on 29th be believed meticulously, it does not in any way involve the HUF. Again Shri Dhanraj Dugar has quoted the exact amounts for which he purchased the valuable jewellery but the additions made by the ITO are not in terms of this statement. They are in higher figures after getting the prices of the recovered articles estimated by another expert. This means that the statement of Shri Dhanraj Dugar to which much importance is attached by the departmental representative was not actually relied on meticulously even by the Income-tax Department. 7. Lastly, all through the proceedings before us, the representative of the assessee insisted upon the department to produce some docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that they may be of some help to the assessee otherwise why should the department make an effort to withhold them. Mr. Koolwal urged that they were only loose sheets but even then the department should have preserved meticulously all documents recovered at the time of search, particularly when their case has been thrown out by the Commissioner (Appeals). Under these exceptional circumstances it is difficult for us to straightaway say anything or reverse the decision of the Commissioner (Appeals) in relation to the additions on account of unexplained investments purporting to have been made on the basis of search and statements recorded at the time of search which as we have pointed out above raised a number of suspicions. 7.1 After an overall consideration of all these facts and circumstances, we are of the opinion that it would be proper if a more detailed and thorough investigation is done into the matter by permitting the assessee to cross-examine Shri. Vijay Kumar, Shri. E. Saroj, Shri. K. S. Tiwari and the panches in whose presence the statement of Shri. Dhanraj Dugar is stated to have been recorded. The department will also produce the so-called loose, documents Exhibit ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d daughter. The fourth reason of the ITO had also been dealt with elaborately by the Commissioner (Appeals) in the case of the HUF. Thereafter, he has mentioned the facts as made by Smt. Ratan Devi and after a detailed discussion deleted the entire addition made in her hand. Since we are doubtful about the exact version of the department as put forward in these proceedings, we have no alternative but to restore the matter back to the Commissioner (Appeals) in relation to this lady also. 10. There are a number of cross-objections, raised on behalf of the assessee pointing out that the Commissioner (Appeals) should have accepted his entire version and not maintained certain additions at the instance of the department. They relate to estimate of certain other expenditure, estimate of household expenditure of the assessee, exclusive ownership of pieces of diamond by Shri Chandanmal Dugar, ownership of certain assets by Smt. Ratan Devi Dugar and sustaining of addition of Rs. 8,902. Besides that the Commissioner (Appeals) order maintaining levy of interest under sections 215 and 217 has also been challenged. As we have pointed out above, we are not deleting any additions made by the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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