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TMI Blog2007 (6) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is uncalled for." 3. The learned counsel for the assessee, Sh. Sudhir Sehgal, submitted that the additional ground raised by the assessee is purely legal in nature for which all relevant facts are already on record. The case does not warrant any further investigation into the facts. Relying on the judgment of Hon ble Supreme Court in the case of National Thermal Powar Co. Ltd. v. CIT [1998] 229 ITR 383 (SC), the learned counsel for the assessee submitted that the additional ground deserves to be admitted. 4. The learned CIT (Departmental Representative), Sh. Kuldip Singh, on the other hand, opposed the admission of additional ground. He drew our attention to letter dated 19-1-2006 of Shri P.S. Sachdev, the then Addl. CIT (Tribunal), where objections to the admission of the additional ground have been submitted in writing. He submitted that these may also be taken into account. In the written submissions, the learned Departmental Representative has submitted that the Tribunal being the final fact finding authority, it is its fundamental duty to unveil the device to determine the true nature of a transaction. However, it is settled law that the Tribunal cannot travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Their Lordships of Supreme Court in the case of National Thermal Power Co. Ltd. ( supra ) have observed that the power of the Tribunal vested under section 254 in dealing with appeals is expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. The Hon ble apex Court has further observed that there is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the CIT(A). Both the assessee as well as the Department have a right to file an appeal/cross-objection before the Tribunal. The apex Court further observed that the Tribunal should not be prevented from considering a question of law arising in assessment proceedings, although not raised earlier provided all relevant facts relating to such issue are already on record. When the request of the assessee for admission of additional ground is soon in the light of the ratio of the aforesaid judgment, it is clear that the ground is purely legal in nature, for which relevant facts are already on record. Therefore, relying on the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the present case the copies of 17 foreign bank drafts received by the assessee were found and seized during the course of search. Besides, the bank passbooks of the assessee, where these foreign bank drafts were credited, were also found during the course of search. He referred to pp. 3 and 4 of the assessment order, where the assessee was questioned about the names and addresses of the persons from whom these bank drafts had been received. The assessee expressed his inability to indicate their names and addresses either in India or abroad. He submitted that the assessee also took contradictory stands. Initially, he submitted that the accounts received were interest-free loans. Later, he submitted that these were a kind of Amanat from friends. He further stated that during the course of block assessment proceedings, the assessee was issued a questionnaire to furnish the value of total assets owned by the assessee. In reply thereto, the assessee furnished details of assets worth Rs. 48,35,975. In order to explain the source of acquisition of these assets, the assessee submitted that these were acquired out of foreign remittance of Rs. 24,95,862 in his name and Rs. 9,46,998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosed in the returns of income filed by the assessee prior to the date of search, though the claim of the assessee is that since no books of account were maintained, the assessee was under no obligation to disclose the same in the regular returns. It is also a fact that the assessee was questioned about the nature of transactions by way of foreign remittances in his statement recorded on 21-12-1995 i.e. after the search but before the issue of notice under section 158BC. The questions and answers have been noted on pp. 3 and 4 of the block assessment order. It is a fact that the assessee could not indicate the names and addresses of the persons from whom these foreign remittances had been received. Neither local addresses in India nor abroad of these persons were indicated. In fact, he was categorically asked as to whether he had maintained any separate details or diary anywhere else or whether any correspondence was exchanged between him and the persons who had sent money from abroad. He categorically stated that neither any details were maintained, nor any correspondence was exchanged. He stated that the only information about receipt from 10 friends or more was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years. This section was amended by the Finance Act, 2002 with retrospective effect from 1-7-1995 when the expression relatable to such evidence was added to the then existing provisions. From the provisions of the Act, it is absolutely clear that the scope of block assessments is confined to computation of undisclosed income, on the basis of evidence found as a result of search, or requisition of books of account, or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence. 10. Now it is a fact that in this case, the search and seizure action carried out by the Income-tax authorities revealed assets worth Rs. 48,15,978 during the block period. It is also a fact that the total income disclosed in the regular returns aggregated to Rs. 3,41,061. It is also a fact that the assessee declared undisclosed income amounting to Rs. 12,72,470 in the block re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0] 73 ITD 379 (Nag.); ( vi )Decision of Tribunal, Mumbai Bench, in the case of Sunder Agencies v. Dy. CIT [1997] 63 ITD 245 (Mum.); ( vii )Decision of Tribunal, Mumbai Bench, in the case of Harakchand N. Jain v. Asstt. CIT [1998] 101 Taxman 324 (Mum.) (Mag.); ( viii )Decision of Tribunal, Jodhpur Bench, in the case of Chitra Devi v. Asstt. CIT [2002] 77 TTJ (Jodh.) 640; ( ix )Decision of Tribunal, Chennai Bench, in the case of P.K. Ganeshwar v. Dy. CIT [2002] 80 ITD 429; ( x )Judgment of Hon ble Rajasthan High Court in the case of CIT v. Rajendra Prasad Gupta [2001] 248 ITR 350/ 117 Taxman 507 (Raj.); ( xi )Decision of Tribunal, Chennai Bench, in the case of Vignesh Flat Housing Promoters v. Dy. CIT [2002] 77 TTJ (Chennai) 873; ( xii )Decision of Tribunal, Lucknow Bench, in the case of Smt. Savitri Devi v. Asstt. CIT [2002] 76 TTJ (Lucknow) 628; We have no quarrel with the proposition that the scope of block assessment is confined only to evidence and material found during the course of search and such other material or information as is available with the Assessing Officer and relatable to such evidence. But in the present case, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,20,000. As regards the source of acquisition of these assets, the assessee explained as under : ( i ) Capital acquired over the years 1,00,000 ( ii ) Gold sold in 1987 1,15,000 ( iii ) Money/investment left by father in 1990 in the form of cash/gold/other assets 2,50,000 ( iv ) Sale proceeds of old house 1,95,000 ( v ) Undisclosed income shown in the block assessment return 12,72,470 ( vi ) Foreign remittance from NRE a/cs in the name of self 24,95,862 ( vii ) Foreign remittance received by wife 9,46,998 Total 53,75,330 The assessee submitted hat the normal household expenses were met out of the income disclosed in the regular return. Thus, it was submitted that the source of assets including undisclosed household expenses aggregating to Rs. 48,35,975 stood fully explained by sources of Rs. 53.75.330. The Assessing Officer examined the explanation of the assessee and observed that there was no evidence with regard to the money left by the assessee s father in the year 1990. He observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amounts as Amanat without charging any interest, particularly when involved substantial monetary loss of interest which was otherwise tax free. The Assessing Officer also took note of the fact that the entire deposits were received in a short period of 3 months followed by immediate withdrawals. Thus, he concluded that the assessee had tried to give a colour of white money to his undisclosed funds/assets through these bank entries, by first receiving the alleged foreign remittances and then withdrawing the same for handing over the same money to the persons from whom or through whom the alleged foreign remittances were received. He also observed that the assets equal to the value of foreign remittances to the extent of Rs. 34,42,830 were also not found in the course of search. He further supported his finding with the observation that if the amounts were received as Amanat , how the assessee was able to tell their names and addresses and how he intended to return the said amount to those persons. Thus, the Assessing Officer concluded that the so-called foreign remittances received by self and his wife" were nothing, but the assessee s own undisclosed funds routed through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had claimed credit of Rs. 2,50,000 for the same. The Assessing Officer has rejected the claim on the ground that no documentary evidence has been furnished by the assessee. The Assessing Officer has also observed that apart from the assessee, there were his two other brothers, who must have also received their share from the father. But the learned counsel submitted that the Assessing Officer totally lost sight of the fact that the assessee s father was staying with the assessee. He contended that the credit of Rs. 2,50,000 should be allowed. He further stated that a sum of Rs. 1,00,000 being capital of the assessee over the years, was accepted by the Assessing Officer as per para 3 at p. 3 of the assessment order. However, no credit for the same has been allowed by the Assessing Officer while computing the undisclosed income. The learned counsel for the assessee further submitted that foreign remittance? worth Rs. 9,46,998 were received by Smt. Sunita Verma, wife of the assessee. He referred to p. 9 of the assessment order, where the details of two drafts received by wife are separately indicated. He further submitted that Smt. Sunita Verma was being assessed to tax separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign remittances. He submitted that the addition made by the Assessing Officer falls in the realm of surmises and conjectures. No addition for the same can be made in the block assessment on the basis of such surmises and conjectures. He relied on the following judgments : ( i ) CIT v. Shri Ram Narain Geol [1997] 224 ITR 180/ 92 Taxman 259 (P H); ( ii )Decision of Tribunal, Allahabad Bench, in the case of Monga Metals (P.) Ltd. v. Asstt. CIT [2000] 111 Taxman 175 . ( iii )Decision of Tribunal, Nagpur Bench in the case of Elite Developers ( supra ); ( iv )Decision of Tribunal, Patna Bench in the case of D.N. Kamani (HUF) v. Dy. CIT [1999] 70 ITD 77 (TM); ( v )Decision of Tribunal, Kolkata Bench, in the case of Jt. CIT v. Gramophone Co. of India Ltd. [2003] 87 ITD 88 (Cal.)(TM). 15. The learned Departmental Representative, on the other hand, heavily relied on the block assessment order. He submitted that the case of the assessee requires to be examined in the light of the fact that in the regular returns filed for the various assessment years, the assessee had declared very nominal income on estimate basis. During the course of search, incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the onus for proving the source of credits in the accounts of the assessee was purely on the assessee and such issues need to be decided by applying the test of preponderance of human probabilities. He further stated that the assessee had not produced any evidence about the money left by the father. In the absence of any evidence, the Assessing Officer was justified in not allowing the credit for the same. As regards the foreign remittance received in the name of the assessee s wife, the learned Departmental Representative submitted that it is a tact that the amounts were credited in the joint bank account of the assessee and his wife. He relied on the judgmental Hon ble Kerala High Court in the case of P.K. Narayanan v. CIT [1998] 229 ITR 596 in support of the contention that if the source of the amounts held in the name of the wife was not proved, addition could be made in the hands of the husband. He further submitted that it is not a case where the Assessing Officer has made the addition merely on the basis of suspicion and conjectures. Addition has been made on the basis of concrete evidence found during the course of search. Thus, he submitted that the order of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has allowed credit for undisclosed interest from pawning of jewellery to the extent of Rs. 11,00,000. Thus, credit has been allowed to the assessee to the extent of Rs. 15,10,000, i.e., Rs. 4,10,000 + Rs. 11,00,000. After reducing this amount of Rs. 15,10,000 from the total value of the assets at Rs. 48,35,975, the Assessing Officer has made the addition of the remaining amount of Rs. 33,00,000. Therefore, we do not find any merit in the ground of appeal of the assessee that grant of Rs. 1,00,000 has not been allowed to the assessee. Therefore, this ground of appeal is dismissed. 16.2 The next aspect of the case that requires to be examined is whether the source of acquisition of assets to the extent of foreign remittances of Rs. 34,00,000 in the name of self and wife could be accepted or not. Before deciding this matter, we wish to make it clear that the Assessing Officer has not made any separate addition on account of unexplained foreign remittances. The Assessing Officer has not accepted the explanation, of the assessee with regard to the source of acquisition of the assets out of foreign remittances. While dealing with the additional ground of appeal, we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en placed before us to show that these bank accounts were declared before the Income-tax authorities. Foreign remittances credited in the said account were also not disclosed to the Income-tax Department. Therefore, the additions made by the Assessing Officer to fall in the definition of undisclosed income. Nevertheless, the issue that still requires to be decided is whether on the basis of the evidence and material on record, the entire addition made by the Assessing Officer to the extent of his 33,00,000 justified. As regards the source of the assets, explained with the help of the foreign remittances, the Assessing Officer has taken into account the following important facts while rejecting the claim of the assessee : ( i )The foreign remittances surfaced in the bank account of the assessee and his wife in the month of September, 1994 and continued for 3 months. The amounts credited by way of the foreign remittances were immediately withdrawn. ( ii )Most of the assets having value of Rs. 48,35,975 stood already acquired prior to the receipt of foreign remittances. The withdrawals for the foreign remittances were not represented by any investment in the assets. The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce placed on record to link a particular investment out of the foreign remittances. In fact, the Assessing Officer has recorded a clear finding that most of the assets had been acquired before the date of search and before the receipt of the foreign remittances. The assessee has not placed any material or evidence before this Bench to controvert such finding of the Assessing Officer. Unless any evidence is furnished by the assesses to show that the amounts withdrawn from the foreign remittances were invested in the assets, the claim of the assessee with regard, to the source of acquisition of these assets out of the foreign remittances cannot be accepted, more so, when the so-called foreign remittances had not come out of the disclosed income of the assessee. 16.3 Apart from the above, the reply of the assessee to the Assessing Officer placed at pp. 10 to 16 of the explains the position with regard to the acquisition of the various assets. Para 7 on p. 13 of the paper book indicates the year-wise position of loans advanced against pawning . The year-wise position indicated therein is as under : Financial year Amount advanced 1991-92 (Asst. yr. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered as explained. However, the other reasons given by the Assessing Officer that the assessee failed to mention the names and the addresses of the persons from whom the foreign remittances were received. The contradictory stands that these were loans and later stating that these were Amanat , also go to prove that the assessee had not discharged the onus of proving the source and genuineness of such foreign remittances much less that these were invested in the acquisition of the assets owned by the assessee. Moreover, during the course of search, no evidence, no document indicating exchange of correspondence between the assessee and the persons who remitted the amounts to the lessee, was found. When we apply the test of human probabilities, to appears strange that if they were really close friends to trust the assessee with lakhs of rupees, there is absolutely no evidence of exchange of correspondence to show such friendship. Moreover, the amounts were given out of non-resident external accounts, where interest earned on the same is exempt under the IT Act. It appears rather strange that such persons would not trust the bank and would rather trust the assessee with whom such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als from the foreign remittances of the wife. Therefore, there is no question of allowing any credit of such remittances. As regards the claim of the assessee that addition should have been made in the hands of the assessee s wife under section 158BD, we have observed that no addition has been made by the Assessing Officer en account of undisclosed income represented by the foreign remittances. The issue in question is about the source of acquisition and investment made in the assets belonging to the assessee. The assessee has failed to explain. Further, the finning recorded in respect of earlier ground would also apply to this ground of appeal. Therefore, there is no question of making any addition in the hands of the assessee s wife. This ground of appeal, being devoid of any merit, the same is rejected. 18. The last aspect of the case which requires to be considered is the credit of Rs. 2,60,000 being value of gold ornaments/money etc. received from the father at the time of his death in 1990. The Assessing Officer has rejected the claim of the assessee on the ground that there is no evidence furnished by the assessee and that further the assessee s father also had two other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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