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TMI Blog2015 (6) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... substance in the counsel's argument that the purchases/ sales / gross profit relating to kerosene oil business as shown in the regular books of accounts stood undisturbed by the AO. Keeping in view the facts and circumstances, we are of the view that AO has not pointed out any defect in the trading account pertaining to the oil business nor provisions of section 145 of I.T. Act were applied in assessee's case. Thus, without rejection of the trading account of the assessee, any addition on account of premium from the sale of the same oil which already stood reflected in the trading account was not legally justified. CIT(A) has rightly held that the evidence found in the form of loose papers / diary form the premises of M/s Kumar Oils and M/s Shyam lal Bala Prasad could not be utilized as a valid evidence against the assessee once the assessment in the case of M/s Kumar Oil was made on the returned income NIL. CIT(A) has rightly held that as per the provisions of section 158BC of the Act the evidence recovered from the premises of M/s Kumar Oils and M/s Shyam Lal Bala Prasad could not be made the basis for making addition of undisclosed income in the hands of the assessee - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above notices and also the queries raised in the order sheet from time to time. Thereafter, Ld. AO made various additions including the addition in dispute and completed the assessment u/s. 158BC of the Act, vide his order dated 26.2.2002 for the Block Period 1.4.89 to 4.2.2000. 3. Being aggrieved with the assessment order dated 26.2.2002, assessee appealed before the Ld. CIT(A), who vide impugned order dated 28.5.2004 has partly allowed the appeal of the Assessee. 4. Against the aforesaid order dated 28.5.2004, the Revenue is aggrieved and filed the present appeal before the Tribunal. 5. Shri Ramesh Chandra, Ld. CIT(DR) relied upon the orders passed by the AO and stated that the Ld. CIT(A) has wrongly relied upon by the judgments cited by the assessee and deleted the addition in dispute which is contrary to the law and facts of the case, therefore, the impugned order deserve to be cancelled. He further stated that in the search and seizure proceedings various documentary evidences were seized from the premises of the assessee which are very much relevant to the additions in dispute and are unexplained. In spite of these facts, the Ld. CIT(A) has deleted the addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper Book, may be considered and Appeal filed by the Revenue may be dismissed. For the sake of convenience, we hereby reproduce the Synopsis as under:- Initially there was action u/s 132 on 25.11.1998 upon third parties like Kumar Oil and M/s Shyam Lal Bala both were in the business of transporters on the roll of IOC as well as dealer in Kerosin Oil, which was controlled by state govt. There was neither direct evidence in the form of alleged premium paid and ack.nor through the statement u/s132(4) collected from the premises of M/s Kumar Oil and M/s Shyam Lal Prasad as is apparent from entire statements u/s 132(4} recorded 05.02.2000 as is appeared on P.B.no as well as in the body of assessment order. The respondent was subject to a search operation on his business premises on 04.02.02 .AII the seized documents etc. properly explained and there was no documents in connection with the alleged premium. The respondent is a License holder/quota - holder of hill - area of Uttarkashi of Tehri District and other place where kerosene oil is a necessity for the general public. Subsequently the return u/s 158 BC was filed for the block period totaling ₹ 21,77,937/- and was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Basically these two firms are contractor firms lifting goods from the godowns of lOC and they are also in the business of kerosene oil as a quota holder and a license holder. There are no scope for any premium because this commodity is covered under the Essential Commodities Act, regularly monitored by the various Govt. authorities like DM, SDM, SDO During the assessment proceedings the respondent has filed the written submission dt. 28.01.02 supported by the Affidavits of respondent and his brother and few license holders as appearing from PB No. 48 to 55. The respondent has also filed a letter to the AO. The modes of operands by way of a flow chart as appears from PB No. 61 62, and categorically mentioned in PB No. 63 that the assessee is a quota holder since 1976 and not even a single irregularity was found. Certificate from the concerned authorities are available and attached. It was also mentioned that during the search operation of the assessee, no corresponding material was found which correlates the entries found in the third parties. On PB No. 64, it has been stated that if, any, transaction were done with the alleged third party, the Department would have found any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on account of premium has been made in the case of m/s Kumar Oil. In whose case the search was conducted and order was passed u/s.158BC. Then how when there is no purchase by M/s Kumar Oil on what account the said company is giving the premium on kerosene oil to us. It may also be noted that M/s.Kumar Oil has changed its stand and retracted its statements at various levels as per page 12 and 13 of the assessment order of the appellant. The loose papers found from Kumar Oil as per annexure 12 and 13 the total quantity is 430+600= 1030 kilo liter ,whereas nothing has been considered in the hands of M/s Kumar Oil. Therefore the testimony of M/s Kumar Oil could not be said to be reliable. India is a democratic country and every citizen of India has the same right irrespective of the fact whether he holds highest office or is the man is no mean. in the case of V.C. Shukla and others known as 'Jain hawla' case reported in (1998) 3 SCC 410 the honorable supreme court have held that loose sheet or a diary is not a book in the preliminary investigation taken up by the CBI to decode and comprehend those entries revealed payments amounting to ₹ 65.47 crores, out of which & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of evidence found as a result of search and such other material as are available with the AO and relatable to such evidence. The case does not fall in the above framework of the law. There are acatena of authorities which are being given after all the grounds. Therefore, the additions are liable to be quashed/deleted because not only on the above submission but under the constitutional provision that no notional or fictional income being brought on tax contrary to the strict provision of 265 Article entry 82 in the list of the seventh schedule these to which deals Taxes on income other then Agricultural income''. This aspect was very well examined by the APEX COURT in the case of K.P. Verghis 131 ITR 597 and in the case of Lal Chand Bhagat 37 ITR 288 (SC) SHIVA KAMI CO.159 ITR 71 Where their lordship disapproved the system of making additions in the assessment on mere suspicion and surmises. PRECEDENTS RELIED UPON The Hon'ble Supreme Court in Purshottam Potteries 106 ITR 1 their Lordships have held that the Department can collect the legitimate tax as per the Act and not in an arbitrary, mechanical way. It is settled law that a statute must be construed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope and ambit of Chapter XIV-B limited to the materials unearthed during the search Delhi H. C in the case of Balaji Wires (2007) 164 Taxman 559, 565 (Para 12) has held that in the absence of any incriminating material found during the search / requisition nothing is to be considered for the purpose of Block Assessment under Chapter XIV-B. Delhi H. C in the case of Vishal Aggarwal reported in 283 ITR 326, 328 Although the judgment related to the already disclosed gift the ratio is squarely applicable because it was held that post - search enquiry was unconnected with the information / material recovered during the search) 287 ITR 285 (Delhi High Court). If no evidence of concealment of income is discovered, no estimation can be made based upon 250 ITR 141 and 276 ITR 563. In another case Delhi High Court in 287 ITR 287 have defined the scope of Chapter XIV-B if no incriminating material found additions cannot be made wherein the Tribunal has also held that mere silence on the part of the assessee would not change the character of undisclosed income. There are no assumptions and presumptions as held by Hon'ble Delhi high court as reported in 296 ITR 619 and in another c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 172 Taxman 223 has held that if the seized document did not mention any particular date and year and therefore its existence could not be attributed to the Block Period under consideration and moreover on asking (for) a comment from the AO in this regard) and if he keeps silent on a (that) particular issue then it also shows an adverse reference against the Department. The Delhi High Court in the case of S.M.Aggarwal 162 Taxman 3, 8 has held that the entries in dumb documents cannot be concluded to represent the undisclosed income. DELHI BENCH in the case of PAWAN KUMAR GUPTA 131 DJ (UO) 92. It was held that the statement of alleged person not provided nor any cross examination additions are liable to be deleted. 3rd member of Delhi Bench in the case of Amarjit Singh 81 TTJ 169 has held that addition in the block assessment should be based on documents found and recovered during search. The Hon'ble Mumbai Tribunal in the case of Sunder Agencies reported in 63 ITD 245, Madras ITAT in 65 ITD 183, 206 and the Indore Bench in the case of Indore Construction Company 70 ITD 128 wherein the Hon'ble Tribunal has held that income for the Block Assessment is to be comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. In the present case not a single piece of evidence was found or seized to correlate the assumption purported to be made. Accordingly the order is liable to be quashed. The Mumbai Bench in the case of Shailesh S.Shah reported in 63 ITD 153 the ratio of the case that the assessee's income should be on the basis of documents seized and the onus is on the Department to prove that alleged receipts were assessee's income and therefore the addition being merely on basis of suspicion could not be sustained. 3rd member of Mumbai Bench in the case of SP Goyal 77 TTJ 1 where it was held that addition of ₹ 60 lacs on the basis of noting on loose sheets, diary seized at the premises of the assessee was not just. In the present case not a single piece of evidence was seized and all the evidence was seized from a third party search and from whom the jotting and dotting sheet was recovered. On that sheet there was no mention of the assessee's name but only of the transporters appointed by the IOC for supply of goods to the respondent. The Allahabad High court in the case of Smt. Usha Tripati 166 CTR 77 held that AO was not justified in estimating the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have heard both the counsel and perused the relevant records available with us, especially the impugned orders passed by the Revenue Authorities; written submissions filed by the assessee alongwith the Paper Books and the arguments advanced by the Ld. DR who has strongly the opposed the arguments advanced by the Ld. Counsel of the assessee with the support of the assessment order. We are of the considered view that the issue involved in ground no. 2 regarding deletion of addition of ₹ 44,60,881/- on account of premium of Kerosene Oil and with regard to ground no. 3 relating to deletion of addition of ₹ 25,000/- on account of extra premium. We find that the Ld. CIT(A) has carefully considered the facts and submissions and have perused the relevant record and thereafter found that there is substance in the arguments of the Ld. Counsel that on the basis of discrepancies / defects pointed out by the AO on examination of the seized material it was not possible to draw the inference that the assessee had received premium on the account of sale of kerosene oil. We find that Ld. CIT(A) was agreed with the Counsel that the AO was not justified to rely on the letter of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In view of the above, we find that Ld. CIT(A) has rightly held that the AO was not justified to make addition on account of premium income from sale of kerosene oil on the basis of seized material recovered from the premises of third parties i.e. M/s Kumar Oils and M/s Shyam Lal Bala Prasad, particularly in the absence of any corroborative evidence in support of such income. Therefore, the major amount of ₹ 29,14,027/- and ₹ 26,62,075/- computed on account of premium received from M/s Kumar Oils and M/s Shyam Lal Bala Prasad included in the premium income after deduction of 20% for expenses were not sustainable, hence, we uphold the impugned order on this issue of deletion of addition of ₹ 44,60,881/-. 7.1 As regards the deletion of addition of ₹ 25,000/- on account of extra premium. Keeping in view of the facts and circumstances of the case as explained above, and also in view of the well reasoned Order passed by the Ld. CIT(A) on the issue in dispute, we find no infirmity in the impugned Order on this issue and hence, we uphold the same by dismissing the appeal filed by the Revenue. 8. In the result, the appeal of the Revenue is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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