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2012 (10) TMI 709

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..... SHRI G E VEERABHADRAPPA SHRI VIJAY PAL RAO, JJ. Assessee by Ms Aarti Vissanji Revenue by Sh C G K Nair PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order dated 8/3/2006 CIT(A) arising from block assessment under section 158 BC read with section 158 BD of I T Act. 2 The assessee is raised following grounds in this appeal: 1. On the facts and c circumstances of the case the Assessing Officer has erred in making addition of Rs. 23,36,000/- as unaccounted income for the financial year 2000-02 on account of alleged Hawala payment of US$50,000 to Dubai. The same is without any equity and justice and be therefore, deleted. 2. On the facts and circumstances of the case the Assessing Officer has erred in making addition of Rs. 3,50,000/- on account of difference in book balance of the assessee and Mega Bollywood Pvt Ltd. the same be deleted. 3 The assessee has also filed a letter dated 11/6/2012 seeking permission to file additional ground as under: The addition of Rs. 23,36,000/- made u/s 158BD is based on information obtained from external sources and does not form subject matter of the satisfaction recorded for in .....

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..... umber of the assessee. Accordingly, the Assessing Officer issued a show cause notice to the assessee on 13/1/2005 for his explanation. 4,3 In reply, the assessee has mainly contended that the Dubai telephone number in question belongs to the reputed jewellery firm named as Samby Jewellery and the assessee s firm B Vijaykuamr Co is one of the leading diamond exporters from India and has been dealing with many customers spread across the globe. Therefore, it was stated that these phone calls were made from their office by the partners/directors/representative of the jewellery firm while visited in the office of the assessee and not by the assessee. The Assessing Officer did not accept the submissions of the assessee and found that the assessee is having export business of diamond to the countries like USA, Hong Kong, Japan and Singapore and imports were made from London, Belgium and Israel. The Assessing Officer has referred the statement of the assessee recorded on 5/6/2002 and in reply to question number 12, the assessee had admitted that very little exports were made to Dubai/Gulf countries. The Assessing Officer further noted that the telephone calls in the month of Number .....

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..... of Special Bench of Delhi Tribunal in case of Manoj Aggarwal vs DCIT reported in 113 ITD 377 and submitted that in the block assessment, the Assessing Officer is concerned only with the undisclosed income and in these proceedings he has no power to consider material and evidence not detect it as a result of search. 5.2 On the other hand, the learned DR has relied upon the order of authorities below. He has also relied upon the decision of honourable Gujarat High Court in case of Priya Blue Industries P. Ltd. v. Joint Commissioner of Income-tax reported in 251 ITR 615, decision in case of Rushil Industries Ltd. v. Harsh Prakash reported in 251 ITR 608 and decision in case of Premjibhai and Sons v. Joint Commissioner of Incometax reported in 251 ITR 625. The learned DR has submitted that there is no condition under section 158 BD that notice under section 158 BD can be issued only if the authorities have already seized books of account or other documents belonging to the assessee indicating that the undisclosed income belongs to it. He has submitted that at any stage, during the proceedings against the person searched, the Assessing Officer is satisfied that any undisclosed inco .....

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..... to the assessee. It is also established that the timing of phone calls matches with the timing of the transaction of hawala payment of the US$ 50,000 as alleged in the police report. However, there was no material or evidence except the police report to show that the money of US$ 50,000 was actually paid by the assessee on behalf of the assessee. 7.1 Even, the moment of the said amount of money is also not the established by any material or evidence except the police report. The authorities below heavily relied upon the police report and the circumstantial evidence of phone calls. In the absence of any direct evidence to show that US$ 50,000 was actually changed hands and one of the parties in the transaction of money transfer is assessee, the police report, which is subject to the scrutiny of court of law, as such cannot be taken as conclusive evidence to establish the actual payment of hawala money by the assessee. The seized material however, corroborates the police report only to the extent that the alleged phone calls were made to Dubai from the telephone of the assessee but do not establish the actual hawala payment of such amount by the assessee. 7.2 Since the police rep .....

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..... the reconciliation. It is stated that the Assessing Officer has explained that he overlooked the receipts of Rs.3 likhs dated 10.11.2000 and payment dated 9-9-2000 of Rs.50,000I- has been accounted twice. In so far as the amount of Rs.5,31,50,000I- paid during the period between 1-12-2000 to 16-12-2000 is concerned, it has been stated that it was due to the wrong manual totalling on the seized piece of paper. Instead of Rs.5,31,50,000l- it was written as Rs.5,32,50,000/- because of wrong totalling on the seized piece of paper. If the Assessing Officer had properly reconciled these facts, there would have been no difference in the accounts of Mis. Mega Botlywood Pvt. Ltd.8.3 The ld AR has submitted that both the Assessing Officer as well as CIT(A) failed to considered the explanation of the assessee regarding the difference appearing in the seized loose sheets and books of account being cheque received of Rs. 3 lakhs and payment of Rs. 50,000 accounted twice. 8.4 On the other hand the learned DR. has relied upon the order of the authorities below. 8.2 We have considered the rival submissions and relevant material on record. It is manifest from the assessment order and the impu .....

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