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TMI Blog1999 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... from plot business for different assessment years has been challenged. The impugned addition has been made on assumption of profit on average rate basis on sale of plots. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 2 in the case, of Kisanrao M. Khopade [IT (SS) Appeal No. 281 (Pune) of 1997]. As such, the decision given by us in our aforesaid order will apply mutatis munutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade we allow this ground in part. The A.0. is directed to restrict the additions in this regard to the extent of "Excess money" actually found to have been charged on the basis of seized material. 5. Ground No.3: This ground reads as under: "The appellant craves leave to add, alter or amend the grounds of appeal." Obviously, this ground is general in nature and calls for no comments. 6. In the result, the appeal is allowed in part. 7. Per Singhal (Judicial Menber) - After going through the proposed order of my learned Brother very carefully, I have not been able to persuade myself to agree with the conclusion reached by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Except as stated above, I agree with the proposed order. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per Shri B.L. Chhibber, Accountant Member - As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income-tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire: "(1) Whether on the facts and circumstances of the case, the provisions of section 145 can be applied while assessing the undisclosed income on sale of plots under Chapter XIV-B of the Income-tax Act, 1961? (2) If the answer to question No.1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income-tax Act, 1961?" ORDER Per B.L. Chhibber, Accountant Member - The assessee before us is Khopade Family Trust of which Mr. Kisanrao M. Khopade is the trustee. The trust carries on trading of plots. The assessee is maintaining regular books of account and also entering actual transacted amount in separate registers viz. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitute to the above grounds of appeal." Obviously, this ground is general in nature and calls for no comments. 7. In the result, the appeal is allowed in part. 8. Per Singhal, Judicial Member - After going through the proposed order of my learned Brother very carefully, I have not been able to persuade myself to agree with the conclusion reached by him in respect of Ground No.3 which relate to the addition of Rs.39,48,873 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter. 9. The conclusion arrived at by my learned Brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons:-- (a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication. (b) In the absence of application of section 145 there is no scope of estimation of undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 143 of the Income-tax Act, 1961?" ORDER Per B.L. Chhibber, Accountant Member - The assessee is the son of Mr. Kisanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as seven grounds have been raised in this appeal. The same are discussed and disposed of as follows: 2. Ground No.1 - This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 3. Ground No. 2 - This ground reads as follows: "There is no order passed under section 158BC r.w.s. 143 but it is a draft order and hence draft order is not an order contemplated under section 158BC. Hence demand notice issued on the basis of draft order is bad in law and illegal." At the time of hearing this ground was not pressed. The same is accordingly dismissed. 4. Ground No.3 - In this ground an addition of Rs.23,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the detailed reasons given in the case of Kisanrao M. Khopade we delete the impugned addition. This ground accordingly succeeds. 8. Ground No.7 - This ground reads as follows: "The appellant craves leave to add to, alter, amend any grounds of appeal." Obviously this ground is general in nature and calls for no comments. 9. In the result, the appeal is allowed in part. 10. Per Singhal, Judicial Member - After going through the proposed order of my learned Brother very carefully, I have not been able to pursuade myself to agree with the conclusion reached by him in respect of Ground No. 4 which relate to the addition of Rs.4,72,864 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter. 11. The conclusion arrived at by my learned Brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons:-- (a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income on sale of plots under Chapter XIV-B of the Income-tax Act, 1961? (2) If the answer to question No.1 is in the negative, whether there is any scope of estimation of undisclosed income under Chapter XIV-B by applying the provisions of section 143 of the Income-tax Act, 1961." ORDER Per Shri B.L. Chhibber, Accountant Member - The assessee is a daughter of Mr. Kisanrao M. Khopade. There was an action under section 132 in the case of Khopade Group of cases to which the assessee belongs. As a result of search, assessment was completed under section 158BC for the block period 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as 12 grounds have been raised in this appeal. The same are discussed and disposed of accordingly. 2. Ground No.1 - This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 3. Ground No.2 - In this ground an addition of Rs.50,000 on account of cash paid to Shri Bhatu Rajuguru being in contravention of section 40A(3) has been challenged. The facts, reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed in the said case, the jewellery found in possession of different members of the family was discussed and no substantive addition has been made. So far as the present assessee is concerned, she possessed a nominal jewellery weighing 102.425 grams. According to her statement the gold ornaments were received by her from her maternal grand fatherand grand mother which was corroborated by her statement taken on oath at the time of search action vide answer to question No. 20 on page 7. The jewellery found is as per the CBDT circular bearing Instruction No. 1916, dated 11-5-1994 which gives guidelines in respect of seizure of jewellery. The assessee is unmarried lady and owns 102.425 grams of gold jewellery which is farless than as prescribed in the instructions (250 grams for unmarried lady) and the sources of these items is explained in her statement recorded under section 132 of the Act. Accordingly, we hold that there is no justification for making the impugned addition of Rs.53,261 on protective basis. The jewellery possessed by her stands duly explained. The addition of Rs.53,261 is accordingly deleted, This ground is accordingly allowed. 8. Ground No.9 - In this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case, This conclusion is based on the following reasons:-- (a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication. (b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143. (c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income. (d) No defect has been found in the cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 3. Grounds Nos. 2 3: Thus are incidental to each other. These relate to the additions of Rs.1,00,000 and Rs.1,51,078. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, we hold that there is no justification for the impugned additions. The same are accordingly deleted. These grounds accordingly succeed. 4. Ground No. 4: In this ground an addition of Rs.6,55,476 on account of profit on sale of plots in various Gat Nos. on average basis has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No.2 in the case of Kisanrao M. Khopade, As such, the decision given by us in our aforesaid order will apply muttatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao M. Khopade we allow this ground in part. The Assessing Officer is directed to restrict the addition in this regard to the extent of "excess money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S) Appeal No. 275 (Pune) of 1997]. For the detailed reasons given therein, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground therefore, succeeds. 8. Ground No. 8: In this ground an addition of Rs.1,84,000 on account of payments made in contravention of section 40A(3) of the Act has been challenged. The facts, reasoning and arguments of both the sides are identical to those discussed by us in Ground No.30 in the case of Kisanrao M. Khopade. For the detailed reasons given therein, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground therefore, succeeds. 9. Ground No. 9: In this ground an addition of Rs.1,00,000 on account of cash has been challenged. This ground is corollary to Ground No.4 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, we hold that there is no justification for the impugned addition. The same is accordingly deleted. This ground therefore, succeeds. 10. Ground No.10: In this ground an addition of Rs.1,71,000 on account of debtors has been challenged. The fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of plots. According to him, this is the record which was maintained by him for his personal knowledge and information and therefore, according to the human probabilities, it is to be considered as true and correct of his undisclosed income. (d) No defect has been found in the cash flow statement prepared by the assessee on the basis of the entries in the Bharna Register, Diaries and Loose Papers except the minor discrepancy. 16. The controversies which have arisen before us are the following:-- (1) Whether there is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B. (2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case? (3) If yes, then what should be the quantum of estimate of the undisclosed income? 17. This controversy has arisen in the case of Khopade Kishanrao Manikrao who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the Assessing Officer on this issue and restore the matter for fresh adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate basis on sale of plots has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Gr. No. 2 in the case of Kisanrao Manikrao Khopade. As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade, we allow this ground in part. The Assessing Officer is directed to restrict the addition in this regard to the extent of "excess money" actually found to have been charged on the basis of seized material. 5. Ground No. 3: In this ground an addition of Rs.11,19,825 on protective basis for assessment year 1997-98 on account of advances given to land owners has been challenged. The facts leading to this addition have been discussed in para 20 on page 20 to 23 of the assessment order. These facts have also been discussed by us in great detail in the case of Kisanrao Manikrao Khopade. A substantive addition has been made in the hands of the husband of the assessee, viz. Kisanrao M. Khopade while protective addition has been made in the case of the assessee. Since we have held that no addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as per cash flow statement has been challenged. This ground is corollary to Ground No. 2 discussed above. Since the cash flow statement has been prepared after taking into consideration the unaccounted receipts and payments, for the reasons discussed in Ground No. 2 supra, we hold that there is no justification for the impugned addition of Rs.1,83,890. The same is accordingly deleted. This ground accordingly succeeds. 11. Ground No. 7: In this ground an addition of Rs.10,91,940 on account of cash payments made in contravention of section 40A(3) has been challenged. The facts are identical to those discussed by us in Ground No.30 in the case of Kisanrao Manikrao Khopade. For the detailed reasons given in our order in the case of Kisanrao Manikrao Khopade we hold that there is no justification for the impugned addition of Rs.10,91,940 on account of cash payments made in contravention of section 40A(3) of the Act. The same is accordingly deleted. This ground accordingly succeeds. 12. Ground No. 8: In this ground an addition of Rs.3,00,000 on account of debtors has been challenged. The facts are identical to those discussed by us in Ground No. 16 in the case of Kisanrao M. Khopad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2 which relate to the addition of Rs.20,61,433 on account of excess money charged by the assessee on the sale of plots in the block period for the reasons given by me hereafter. 19. The conclusion arrived at by my learned Brother is that there is no scope of estimation of undisclosed income under the provisions of Chapter XIV-B and on the facts of the case. This conclusion is based on the following reasons:-- (a) The Legislature has not made the provisions of section 145 applicable to search cases assessable under Chapter XIV-B. Though sections 143 and 144 are made applicable by section 158BC specifically, there is no reference to section 145. Hence, section 145 cannot be invoked even by implication. (b) In the absence of application of section 145 there is no scope of estimation of undisclosed income under section 143. (c) The seized materials consisting of Bharna Register, Diaries and Loose Papers are the complete record of unaccounted transactions and therefore, the undisclosed income has to be restricted to the amounts mentioned in the seized material regarding excess money charged by the assessee on the sale of plots. According to him, this is the record which was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-4-1986 to 29-11-1996. This assessment has been challenged before us. As many as 12 grounds have been raised in this appeal. The same are discussed and disposed of as follows: 2. Ground No. 1: This ground challenges the validity of the assessment order, inter alia, on the ground that adequate opportunity was not given. At the time of hearing, this ground was not pressed. The same is accordingly dismissed. 3. Ground No. 2: In this ground an addition of Rs.32,26,351 on account of estimation of profit on average rate basis on sale of plots has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Gr. No. 2 in the case of Kisan M. Khopade in IT (SS) A.No. 281/PN/97. As such, the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case. For the detailed reasons given in our aforesaid order, we allow this ground in part. The Assessing Officer is directed to restrict the addition in this regard to the extent of "excess money" actually found to have been charged on the basis of seized material. 4. Ground No. 3: In this ground an addition of Rs.3,56,086 on account of investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted. 6. Ground No. 6: In this ground an addition of Rs.2,50,000 on account of FDR kept with Dena Bank dated 26-9-1996 has been challenged. The facts, reasoning and the arguments of both sides are identical to those discussed by us in Ground No. 4 in the case of Mrs. Kamalabai K. Khopade [I.T. (SS) Appeal No. 277 Pune of 1997]. As such the decision given by us in our aforesaid order will apply mutatis mutandis to the facts of the present case also. For the detailed reasons given in our order in the case of Mrs. Kamalabai K. Khopade we refer this matter to the file of the Assessing Officer with a direction to verify the contention of the assessee and if on verification it is found that the cash credit appears in the regular books of account, the same should be accepted as explained and no addition should be made. 7. Ground No. 7: In this ground an addition of Rs.3,92,138 on account of inflated agricultural income has been challenged. The facts, reasoning and arguments of both sides are identical to those discussed by us in Ground No. 31 in the case of Kisanrao Manikrao Khopade. As such the decision given by us in our aforesaid order will apply mutatis itandis to the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts as in the case of Kisanrao Manikrao Khopade. For the detailed reasons given in the said order, we delete the impugned addition. This ground accordingly succeeds. 12. Ground No. 12 (wrongly mentioned as Ground No. 11): In this ground an addition of Rs.1,70,000 on account of investment made in Flat No. 102, Sahyadri Co-op. Housing Society, Oshiwara, Mumbai, has been challenged. The facts, reasoning and arguments are identical to those discussed by us in Ground No. 14 in the case of Kisanrao Manikrao Khopade. The assessee had purchased flat No. 102, Sahyadri Co-op. Housing Society, Oshiwara, for Rs.2,70,000. Out of this amount, an amount of Rs.1,00,000 was invested by taking loan from LIC of India and balance amount was invested out of regular income which was duly recorded in the regular books of account. The learned counsel for the assessee Shri K.A. Sathe submitted that there is no justification for the impugned addition. The learned D.R. relied on the observations of the learned A.O. 13. We have considered the rival submissions and perused the facts on record. The assessee purchased a flat as stated above after making investment from out of his regular books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is any scope of estimation of undisclosed income under the provisions of Chapter XIV-B. (2) If yes, is there any justification for making estimate of the undisclosed income on the facts of the case? (3) If yes, then what should be the quantum of estimate of the undisclosed income? 19. This controversy has arisen in the case of Khopade Kishanrao Manikrao who is a family member of the present assessee. Since facts are identical, my reasonings of dissent as given in the order of the aforesaid assessee dated 9-2-1999, would apply in the present case. Consequently, I set aside the order of the Assessing Officer on this issue and restore the matter for fresh adjudication in accordance with the guidance given in the aforesaid order. 20. Except as stated above, I agree with the proposed order. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT,1961 As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income-tax Appellate Tribunal with a request that the following questions may be referred to a Third Member or to pass such orders as the President may desire: "(1) Whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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