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TMI Blog2011 (7) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 158BC was issued to him. He filed the return of income for the block period on September 28, 1998, disclosing therein an undisclosed income of a sum of Rs. 34,51,960. During the pendency of the assessment proceeding he died on September 6, 1999, Accordingly, the Assessing Officer by his letter dated November 12, 1999, proposed to treat his wife, sons and grandsons as his legal representatives. However, vide letter dated November 17, 1999 these persons informed the assessing authority that on the demise of Sri R. Basavaraj, the entire estate passed on to the H. R. B. Family Trust in terms of his last will and testament. Accordingly, the assessing authority proceeded to complete the assessment represented by the legal representatives, namely, the HRB Family Trust. 3 The assessing authority after affording adequate opportunities of hearing on various dates passed an assessment order on December 30, 19 99, determining the total undisclosed income in a sum of Rs. 2,66,67,510 which included the admitted undisclosed income of a sum of Rs. 34,51,9 60. Aggrieved by the same, the assessees preferred an appeal before the Commissioner assailing the additions made in the course of block ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ima Bai and others. (6) Whether the Income-tax Appellate Tribunal is justified in deleting an addition of Rs. 5 lakhs representing unaccounted loan advanced by the assessee to Sri H. N. Raghavendra which fact has been voluntarily admitted by the assessee by means of letter filed before the assessing authority and has also been offered as undisclosed income for taxation in the block return. And whether the Income-tax Appellate Tribunal's approach is based upon material warranting such deletion. (7) Whether the Income-tax Appellate Tribunal is justified in deleting an addition of Rs. 15 lakhs representing unexplained credit. voluntarily admitted by the assessee. ln the letter filed before the assessing authority in the course of assessment proceedings. And whether the Tribunal is correct in law in deleting this income on the ground that it does not constitute undisclosed income so as to be included in the block assessment. (8) Whether the Income-tax Appellate Tribunal is correct in law in deleting the undisclosed income of the sum of Rs. 18,41,159 representing the undisclosed income in respect of deposits in Vysya Bank. And whether the Tribunal's approach for deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the sale of shares of M/s. Kurechermala Plantation Ltd., Kerala, brought to tax in the block assessment cannot be considered as undisclosed income. (16) Whether the Income-tax Appellate Tribunal's conclusion in its appellate order to the effect that the capital gains brought to tax in the assessee's case under the block assessment cannot be considered as undisclosed income is supportable in law being based on any valid reason, evidence and material when the assessing authority as well as the Appellate Commissioner have sustained the determination of the capital gains on the basis of relevant related facts, grounds and material as referred to in the respective orders. (17) Whether, on the facts and circumstances of the case, the Tribunal is correct in law in holding the transfer of shares to be void despite the position that the shares have been transferred during the financial year 1996-97 and when the board of directors of the company have also ratified the transfer of shares and such transfer is recorded in the registers of the company. (18) Whether the Tribunal is correct in law in holding that the transfer of shares has not taken place during the financial year1996-97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closed income. Having once admitted the undisclosed income it is not open for him to go behind the same. He further contends that notwithstanding the admitted amounts, the admission does not preclude the Revenue from assessing the said income. 10 On the other hand, the learned counsel for the assessee relies on CIT V. Mr. P. Firm, Muar [1965] 56 ITR 67 (SC) wherein it was held that (headnote) : "The doctrine of 'approbate and reprobate' is only a species of estoppel ;it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income." 11. It was further held by the Supreme Court as follows (page 74) : "The decision in Amarendra Narayan Roy v. CIT, AIR 1954 Cal 271 has no bearing on the question raised before us. There the concessional scheme tempted the assessee to disclose voluntar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal representatives from the stage at which it stood on the date of death. Therefore, in terms of section 159 the legal representatives get into the shoes of the deceased. 15. They are bound by the admissions made. Therefore, they cannot retract the admissions made. 16. In the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala reported in [1973] 91 ITR 18 (SC) the hon'ble Supreme Court held as follows (page 20): "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made it the admission to show that it is incorrect." 17. Therefore, if at all there is any admission that is sought to be retracted it can so be done by "the person who made the admission" and not by anybody else. Hence, the said judgment is aptly applicable to the case on hand. 18 The search under section 132 of the Act was conducted on December 5, 1997. Sri H. R. Basavaraj gave his statement on February 26, 1998, and March 4, 1998. He died on April 6, 1999. If the late Sri H. R. Basavaraj was of the very same view as that of his legal representatives with regard to the undisclosed income admitted by him, he would have retrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswered in favour of the Revenue and against the assessee. Regarding question No. 7 "(7) Whether the Income-tax Appellate Tribunal is justified in deleting an addition of Rs. 15 lakhs representing unexplained credit voluntarily admitted by the assessee in the letter filed before the assessing authority in the course of assessment proceedings. And whether the Tribunal is correct in law in deleting this income on the ground that it does not constitute undisclosed income so as to be included in the block assessment." 21. During the course of the proceedings, the assessee was asked to furnish details to an extent Rs. 15 lakhs which were shown under the head other loans. In the reply dated November 22, 1999, the appellant admitted that the impugned sum of Rs. 15 lakhs could not be explained and hence offered the same as undisclosed income for the block period. Subsequently, before the Assessing Officer it was contended that the said sum was received by the appellant by way of demand draft/cheque and credited to the bank account. The assessee was asked to furnish confirmation letters from the loanees. However, the assessee was not able to explain the same. Since the assessee was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal representatives themselves. The finding recorded by the Tribunal is wholly unjust and opposed to the material available on record. Under these circumstances, we are of the considered view that the order of the Tribunal is erroneous and liable to be set aside. Accordingly, the question is answered in favour of the Revenue and against the assessee. Regarding question No. 8 "(8) Whether the Income-tax Appellate Tribunal is correct in law in deleting the undisclosed income of the sum of Rs. 18,41,159 representing the undisclosed income in respect of deposits in Vysya Bank. And whether the Tribunal's approach for deleting the addition is based on any material." 23 During search operations the material revealed that certain fixed deposits were made by the assessee in benami names amounting to Rs. 83 lakhs in Vysya Bank, Sadashivnagar Branch. That on the maturity of the fixed deposits, the proceeds of the fixed deposits were credited to such benami persons. It was, however, contended before the Assessing Officer that the fixed deposit of Rs. 83 lakhs made in Vysya Bank was duly reflected in the funds flow statement and that the principal amount of Rs. 18,41,159 was deposited du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer came to the view that while preparing the cash flow statement, the assessee had ignored these two payments on the ground that the receipts were not available and thus took into account the total admission of Rs. 1,88,00,000 as against Rs. 2,48,00,000. Accordingly, the Assessing Officer proceeded to make an addition of Rs. 60 lakhs representing the loan amount paid to Sri Devaraj and Sri Bhatkal. (b) The assessee contends that no payments on June 20, 1995, and June 21, 1995, aggregating Rs. 60 lakhs have been made to these parties. On considering the material, the Tribunal held that no receipts were found during the course of search in respect of the said amount of Rs. 60 lakhs. In view of the deposits of the assessee as well as the outcome of the search operations in the case of Sri Devaraj and Sri Bhatkal, wherein both of them have admitted to having received a sum of Rs. 1,88,00,000 and not a sum of Rs. 2,48,00,000, the Tribunal held that the addition made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) is wholly on suspicion and strange to the facts on record. Accordingly, the addition of Rs. 60 lakhs on this account was, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame as cash credit. However, the assessing authority felt that the appellant has failed to explain the same. The appellant had claimed the undrawn profits pertaining to him after he retired from the said firm with effect from April 1, 1991. Further, the amount advanced by him for the firm from May 15, 1992, were repaid back to him in the form of cash on different dates and, hence, that is why the amount should be credited in his favour in the ledger accounts of the firm. Accordingly, the confirmation letter from one of the continuing partners that of Sri N. Chandran was also submitted. On further enquiries the Assessing Officer found that the alleged partner denied any repayment made. He along with another partner, Sri N. Natarajan, have stated that they are mere paper partners and did not invest any capital nor received any amount from the said firm at any point of time. Therefore, the onus to prove that cash repayments were genuine were on the assessee, since the person who gave the confirmation has denied the same. Hence, the Assessing Officer was of the view that the money due from the firm in the form of cash and debt dues amounting in all to Rs. 39,68,357 has remained unprove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces. The material on record would show that a sum of Rs. 6,80,000 was borrowed from Gemini Distilleries between May 20, 1993, and July 22, 1993. Even prior to the date of borrowing, Sri Joshi had already purchased four items of land on January 30, 1993, January 31, 1993, May 17, 1993, and May 18, 1993, out of his own funds at a cost of Rs. 82,000, Rs. 38,000, Rs. 15,000 and Rs. 90,000, respectively. Thereafter the remaining lands were purchased on June 11, 1993, July 26, 1993, July 26, 1993, January 10, 1994, and January 10, 1994. Under these circumstances, it is clear that a substantial extent of the lands were purchased by Mr. Joshi out of his own funds and only a part of it from the, borrowings from Gemini Distilleries. The investment in the agricultural lands made by Sri H. M. Joshi from time to time out of his own funds cannot he construed to he held that these lands were systematically purchased by the assessee in the name of Sri H. M. Joshi. On considering the material, the addition was, therefore, deleted. We find no error committed in arriving at this conclusion. Accordingly, question No. 11 is answered in favour of the assessee and against the Revenue. Regarding questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been transferred during the financial year 1996-97 and when the board of directors of the company have also ratified the transfer of shares and such transfer is recorded in the registers of the company. (18) Whether the Tribunal is correct in law in holding that the transfer of shares has not taken place during financial year 1996-97 on the basis of unsubstantiated contention of the assessee that the transfer was on contravention of the memorandum of understanding and that no consent has been given for the transfer of shares. (19) Whether the Tribunal is correct in law in holding that the transfer of shares is to be treated as void as the assessee has not given his consent for the transfer of shares and whether such view is sustainable when the transfer is actually effected as evident from the ratification of the transfer by the board of directors and such transfer being recorded in the company's registers and records." 32. These questions pertain to capital gains in the assessee's case arising out of the sale of shares of M/s. Kurechermala Plantation Ltd., Kerala, brought to tax under the block assessment, etc. Identical questions of law came up for consideration before this ..... 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