9911796707
TMI Blog1977 (6) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996-97 Rs. 21,93,450 (c) Gross profit on unaccounted sale of jewellery Rs. 2,06,476 (d) Advances on Pronotes Rs. 2,70,000 -------------------------------------- Rs. 36,69,926 -------------------------------------- Out of the above, the assessee claimed deduction on account of shortage of stock in the shop amounting to Rs. 22,71,232. The balance of Rs. 13,98,694 was offered as undisclosed income of the assessee. Before finalisation of the assessment under section 158BC, the proposed assessment order was sent to the Commissioner for his approval. The Commissioner's approval dated 25-7-1996 is available at pages 20 to 23 of the paper-book submitted on behalf of the assessee. The assessment was framed on 30th July, 1996 by the Assistant Commissioner, Circle I(1), Pondicherry. Additions were made on various heads by the Assessing Officer. Some of the income offered was accepted by the Assessing Officer. 2. Before us the assessee is aggrieved mainly on two grounds. The first ground is with regard to the addition on account of interest on fixed deposits. The discussion by the Assessing Officer on account of this addition is as follows :----- " The assessee is accepting de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment made by the assessee is not relatable to the business of the assessee. The decision was accepted by the Department, though the assessee has preferred an appeal against the decision before the Income-tax Appellate Tribunal which is pending. In order to take consistent stand 10 per cent of the interest payment made by the assessee for the previous year relevant to the assessment years 1986-87 to 1995-96 will be disallowed as not relating to business of the assessee. For the assessment year 1996-97, the Assessing Officer shall disallow 10 per cent of the interest debited in the books up to the date of search. This will duly be considered in the proposed block assessment." The learned counsel for the assessee heavily relied on the approval order of the Commissioner and submitted that it was found by the Commissioner that 10 per cent of the interest payment made by the assessee was disallowed during the earlier years. Further it was found that this decision was accepted by the department, although the assessee has preferred appeal against the disallowance of 10 per cent for the assessment year 1991-92. It was further submitted that the order of disallowance on this issue passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special procedure for assessment of search cases, which has been incorporated by the Finance Act, 1995 with effect from 1-7-1995. The object of the special provision is reflected in the Budget Speech of the Finance Minister as follows :---- "Hon'ble Members are aware that the searches conducted by the Income-tax Department are an important means of unearthing black money. However, undisclosed incomes have to be related to the different years in which the income was earned and as such assessments are unduly delayed. In order to make the procedure more effective, I am proposing a new scheme under which undisclosed income detected as a result of search shall be assessed separately at a flat rate of 60 per cent. An appeal against the order can be filed directly before the Income-tax Appellate Tribunal." From the aforesaid Budget Speech it appears that the scheme was evolved with a view to unearth black money by which undisclosed income may be detected at the time of search. What is undisclosed income has been defined in section 158B(b) of the Income-tax Act as follows :--- " 'Undisclosed income' includes any money, bullion, jewellery or other valuable article or thing or any ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 281 has been made for the assessment year 1991-92 as a difference between the proposed block assessment and the revisional order on the basis of Commissioner (Appeals)'s order. For the other years, as we have already found the addition was made on the ground that the assessee agreed to such addition. This has been denied by the Assessing Officer that there was no such agreement on behalf of the assessee. The Commissioner's approval on this issue has already been quoted above, from where we find that the Commissioner noticed the fact that the same issue is pending before the Tribunal out of the regular assessment for the assessment year 1991-92. Therefore in order to take a consistent stand 10 per cent disallowance was directed to be made out of the interest payment made by the assessee for the previous years. We do not find anything there to gather the impression that the assessee had agreed to such an addition. We do not find any whisper in the approval that even in the draft proposal the Assessing Officer proposed to make the addition on the basis of agreement with the assessee. It appears that the contention raised on behalf of the assessee is correct that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein he has stated that 50 per cent of sales has been entered in the account books and the other 50 per cent being kept outside the books. On the basis of the said statement addition of Rs. 2,68,235 was made as profit on unaccounted sale of jewellery. 7. The learned counsel for the assessee has submitted before us that the Assessing Officer has made the following additions on account of unaccounted sales of jewellery :----- 1993-94 . . . Rs. 9,53,539 1994-95 . . . Rs. 4,68,422 1995-96 . . . Rs. 4,31,842 1996-97 . . . Rs. 2,68,235. Out of these additions, the Commissioner has given approval for the addition of Rs. 2,68,235 only for the assessment year 1996-97. It has been clearly stated by the Commissioner that no separate addition is required to be made in respect of the unaccounted sales as per the slips found, during the course of search, as discussed in the preceding paragraphs. The relevant portion of the order of the Commissioner is quoted below :--- "On the facts of the case, the proposal of the Assessing Officer as regards the adoption of the gross profit of Rs. 2,68,235 on unaccounted sale represented by deficit in the stock of gold and silver is approved. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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