9911796707
TMI Blog2015 (11) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... is business. Such benefit needs to be made eligible to tax within the meaning of section 28(i). Alternatively, it was proposed that the assessee can be assessed under section 41(1) of the Act for the cessation of liability. The assessee did not respond to the proposal. As such, the Assessing Officer included the sum as the undisclosed income of the assessee for the assessment year 1996-97 in the light of the definition of undisclosed income contained in section 158B(b) of the Act. No particular argument was advanced in his regard at the time of hearing. Order was contested on the ground of opportunity. Having heard both the parties and after perusing the records, we uphold the order of the Assessing Officer on this count. - Decided against assessee. Advance paid to Mr. Vivek treated as undisclosed income - Held that:- We find there is no entry with regard to advance to Mr. Vivek in the cash flow statement. Being so, we consider this amount as undisclosed income of the assessee. Accordingly, this ground of the appeal of the assessee is rejected.- Decided against assessee Fixed deposits in Canara bank treated as undisclosed income - Held that:- There are entries for E65,000/- for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1996 for E30,000/-, totaling to E1,20,000/-. Being so, we find that the assessee has explained this expenditure and accordingly, this addition is deleted. This ground of the appeal of the assessee is allowed.- Decided against revenue Investment in Tamilarasi which was treated as undisclosed income - Held that:- This amount of E52,500/- was reflected in the cash flow statement for the year ended 31.03.1992. Being so, the addition cannot be made. Hence, we delete the addition made by the Assessing Officer. Accordingly, this ground of the appeal of the assessee is allowed. - Decided against revenue Purchase of land at Thanjavur treated as undisclosed income - Held that:- These amounts reflected in the cash flow statement at E1,24,000/-as on 31.3.1992 and E89,000/- as on 31.03.1993. Being so, the additions are deleted as the assessee has explained the investments. This ground of the appeal of the assessee are allowed.- Decided against revenue Interest suspense account - Held that:- The assessee has not furnished the details of these expenditure. In our opinion, whenever assessee claimed an expenditure it should be incurred wholly and exclusively for the purpose of business. In the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RI V. DURGA RAO, JUDICIAL MEMBER For The Appellant : Shri. T. Vasudevan, Advocate For The Respondent : Shri. Pathlaveth Priya, IRS, CIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against the order of the DCIT, Central Circle II(4) (i/c), Chennai dated 28.02.2013. 2. The assessee has raised the following grounds:- (1) The learned Assessing Officer erred in treating 85% of the subscribers' deposits of E1,47,86,860/- as the assessee's undisclosed income. (2) The learned Assessing Officer erred in making the disallowances/additions while computing the total undisclosed income of the block period. 1 Purchase of newsprint from capital market : 7,50,000/- 2 Advance to Vivek : 1,50,000/- 3 FD with Canara Bank : 1,65,000/- 4 Difference in cost of construction : 5,19,000/- 5 Personal expenses : 1,94,000/- 6 Household articles : 2,15,000/- 7 Deposits with Canara Bank : 28,53,778/- 8 Investment in UTI : 1,00,000/- 9 Gift to Master Vivek/Krishnapriya : 1,20,000/- 10 Investment in Tamilarasi : 52,500/- 11 Land at Thanjavur : 2,13,000/- 12 Deposits in Tamilarasi : 2,12,310/- 13 Interest suspense acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spose it off on merits and thus render justice. Dated this the 27th day of May, 2015 at Chennai. sd Advocate for assessee 3. First of all, we deal with the additional grounds raised by the ld. Authorised Representative for assessee. As seen from the above extract of the additional grounds and petition for admission of additional grounds, these are signed by the advocate for the assessee namely Shri. T. Vasudevan. Now the question before us, whether the additional ground filed by the ld. Authorised Representative for assessee is maintainable or not. What are the procedures for filing additional ground was discussed in Rule 29 of Income Tax Rules, which is as follows:- Rule 29:- ''The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or , if the income tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45(2) reads as under:- The form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended thereto relating to an assessee shall be signed and verified by the person who is authorised to sign the return of income under section 140 of the Income Tax Act, 1961 as applicable to the assessee. In this case, an additional ground filed by the ld. Authorised Representative for assessee and it is not by assessee himself. In view of the above provisions laid down by the legislature, whether this additional ground is maintainable or not. We came across judgment of Jurisdictional High Court in the case of P. Kuttikrishna Nair vs. I.T.A.T., Madras and Another, (34 ITR 540). In that case, whether the Tribunal can consider the Miscellaneous Petition suo motu and the Tribunal, in exercise of its own powers, can verify the mistake whether pointed out by the D.R. or on its own. This decision of the jurisdictional High Court pertains to the old Income-tax Act of 1922 where rectification by the Tribunal is provided under section 35 of the old Act and in section 35 of the old Act, it was specifically provided that the words "in like manner" appearing in subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to in sub-section (1) of section 178 ;(b) where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be verified by the principal officer thereof ; (cc) in the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor ; (cd) in the case of a limited liability partnership, by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner thereof. (d) in the case of a local authority, by the principal officer thereof; (dd) in the case of a political party referred to in sub-section (4B) of section 139, by the chief executive officer of such party (whether such chief executive officer is known as secretary or by any other designation) ; (e) in the case of any other association, by any member of the association or the principal officer thereof; and (f) in the case of any other person, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintainable. 4. Now coming to the main appeal, the facts of the case relating to the first ground are that the assessee is the proprietor of M/s.Tamilarasi Publication. The business of this proprietory concern is publishing of two magazines namely, Tamilarasi, a weekly and Puthiaparvai, a fortnightly. Regular books of accounts are maintained in respect of this business. This business was commenced in the accounting period 1992-93. Prior to that upto 15.11.1988 he was employed with Tamil Nadu Government as Deputy Director, Information department. During the previous year relevant to assessment years 1990-91 to 1992-93. It was stated that he did not have any major income earning activity. There was a search in the case of the assessee on 24.09.96 u/s 132 of the Income-tax Act, 1961. His residence in Kalashetra colony and the business premises at No. 84, TTK Road, were searched. Various documents as per Panchanama drawn up at the time of search were seized in the course of the search. A notice U/s, 158BC dated 04.11.96 was issued to the assessee. Subsequently notices were issued u/s. 142(1) of the Income-tax Act calling for certain particulars. On his request, the assessee was also p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was also served on the assessee on 07.12.2012. The case was posted for hearing on different dates by Assessing Officer and the assessee's representative appeared before Assessing Officer on the following dates viz. 14.12.2012, 07.01.2013, 28.01.2013, 05.02.2013 and 19.02.2013. During the course of hearing before the Assessing Officer the assessee furnished various details on the issue of subscribers' deposits discussed elaborately in para 4 of the block assessment order dated 13.03.1998. The major issue of genuineness of purchase of newsprint was anyway deleted by the High Court as elaborated above. In respect of other issues forming part of the block assessment order, during the course of hearing before the Assessing Officer the assessee informed that since they are all minor issues and that due to lapse of time, there are no further details available. No written submissions were also made in respect of those issues before Assessing Officer. Accordingly, considering the submissions made during the assessment proceedings, the assessment order was passed by Assessing Officer within the three months time limit from the date of receipt of the order by Assessing Officer as directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VV2 77,500/- (29.4.95) 1,57,500/- (18.05.95) 1,40,000/- (21.01.96) 3,75,000 VV3 2,10,000/- (13.4.95) 2,10,000 VV4 1,57,700/- (13.4.95) 1,62,500/- (02.6.95) 30,000/- (13.12.95) 3,50,200 VV5 500/- (01.04.95) 500 VV10 3,30,000/-(2.5.95) 1,42,500/- (29.7.95) 1,66,300/-(24.2.96) 2,00,000/-(24.2.96) 8,38,800 17,74,500 3.5 We understand that these subscribers (who have paid deposits from various locations) are sent with the weekly/fortnightly copies of Tamilarasi Puthiaparvai by means of lorries/its own van etc. However, this statement could not be corroborated by any documents and no such despatches appear to have taken place at all. This is in view of our below mentioned findings in respect of despatches of both Tamilarasi ( weekly) and Puthiaparvai (fortnightly) to the Agents/subscribers. Kept and maintained by the publications as to date. i). The publication has been dispatching the magazines both by Rail and Book post (duly evidenced by the Despatch Register/Railway Acknowledgements /Postal expenses for Book Post etc. ii). None of the Vasagar Vattams appear to have been included In the Despatch Summary/Register in evidence of despatches. iii). In the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been issued have also not been produced either to the auditor of before the AO. In short assessee does not know the names or have a record of the persons to whom the deposits have been returned. There is no correspondence also in this regard in the nature of request from the depositors for return of the deposits. 4.5 The information collected by the auditor with regard to the dispatch of the magazines to these alleged depositors is also quite revealing. The special auditor has reported that there is absolutely no evidence for dispatch of the magazines to these alleged subscribers. He has enclosed the manuscript copy of the details of the despatches effected in November, 1997. As per this manuscript. 6027 copies have been dispatched but none of it is for the alleged depositors. The details of despatches furnished by the Special auditor are as under: Central : 1853 Egmore : 1785 City Agent : 750 H.B. Stall : 215 Postal : 377 Free copies : 100 Office copies : 50 Subscription & Extra : 896/- 6027/- 1). Since how long are you a reader/subscriber to the above magazine. 2. Whether you are subscribing to both the magazines. 3). Mode of subscription by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to these persons by this office. Again out of these letters a few at random were chosen by the then Assessing Officer for making enquiries. Since the letters have come from various places, like Madurai, Dindugal, Vellore, Palani etc. the local officers of Income Tax Department in these places were requested to make enquiries about the genuineness of the letters and also to ascertain whether such persons were in receipt of the magazines. Here also, the enquiries revealed that these persons in whose names letters were received are not real and genuine depositors. Everyone of them who were contacted by the officers of the department denied having made any deposit. They also denied knowledge about the magazine. Enquiries made at Namakkal revealed that Mr. Chandrasekar who is a lecturer in Ramakrishna Nallammai Industrial Training Institute, had obtained lot of letters signed by students of first year degree courses in his college. But none of the students had made any deposit. The names and addresses of the persons with whom such enquiries were made, along with the brief outcome of such enquiries were also enclosed as Annexure III to the Block Assessment Order. 4.8 Vide his letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be served and where the deposits were denied. In the remand proceedings, the assessee contended that letters sent to many cases were returned 'unserved' because of incomplete address and also due to the fact that many of them have shifted their residences. During the course of hearings on different dates before Assessing Officer, the assessee filed the present address of some of these persons. He also filed affidavits from these persons to the effect that they have indeed subscribed to the two magazines by depositing life-term membership fee of E2,500/-. The assessee also filed the Id. proof and the address proof of these persons. After these were filed by the assessee, vide our letter dated 12.02.2013 before Assessing Officer, the assessee was directed to produce all the persons mentioned in his earlier letters, for personal examination by the undersigned on 19.02.2013. The assessee also produced 9 persons. The details of the persons produced are as under: PERSONS PRODUCED BY THE ASSESSEE ON 19.02.2013 Name of the assessee List in Asst. order Ref. No in list Whether income tax assessee PAN Return copy Bank statement copy Mr. Sakthivelraja Annx. III No su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce anyone out of the 6000 odd persons for personal examination, the ground reality is that the assessee could produce only 9 persons now out of which also only 6 have confirmed. Under the circumstances, after going through the records, on examining the details filed by the assessee and also taking into account the elaborate findings of the earlier Assessing Officer, as extracted in paragraph 4(k) above, the Assessing Officer was satisfied that the assessee is not able to give proper explanation in respect of deposits lying in his account and the source for the same are not satisfactorily explained an since the provisions of sec. 68 is very clear that it is for the assessee to offer satisfactory explanation in respect of credits found in books and as elaborated above since the assessee could not officer satisfactory explanation the amounts credited represent assessee's own undisclosed income assessable u/s.68. However, considering that about 14 of them have affirmed the deposits and taking into account the other factors, it would be reasonable to treat a portion of these deposits as genuine. Going by the small no. Of persons who have confirmed the deposits to the satisfaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine on an estimated basis and having accepted the bonafide of the deposit scheme run by the assessee, no part of the amount of deposits can be subject to addition as unexplained income in the hands of the assessee. 5.1. The ld. Departmental Representative relied on the orders of the Assessing Officer. 5.2 We have heard both the parties and perused the material on record. In this case, the assessee said to have collected the impugned deposits from 6000 persons. The Assessing Officer gave ample of opportunity to get confirmation from the parties from whom the deposits were collected. Out of 6000 persons only 14 of them have given confirmation saying that they have given deposit. Hence the Assessing Officer considered 15% deposit as genuine and the balance he considered as unexplained income of the assessee. Before us, the assessee submitted that the issue has to be decided in favor of the assessee in view of the decision of the Tribunal in the case of M/s. Jaya Publications vide order dated 30.11.2007 in ITA No.1130/Mds/2003 and others. In that case the Tribunal in para 5 observed as under:- ''5. We have heard both the sides and perused the records available with us including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rket regarding this transaction. In their letter Dated 25.2.98 M/s. Capital Market while confirming the delivery of newsprint to the assessee on 21.7.94 denied having received back the news print on 26.8.95. As per entries made in their books of accounts of the assessee along with their letter M/s. Capital Market had sent to the Assessing Officer copies of their letters dated 17.11.95, 15.12.95 and 28.2.96 addressed to Tamilarasi Publication. Of these letters the last two were addressed to the assessee personally. In these letters M/s. Capital Market has made clear that they have not received hack the news print or its cash equivalent of E7.5 lakhs. In their letter dated 25.02.1998 they have categorically stated that they have never got back either 24.5tons of news print given to Tamilarasi Publication for performing certain job work or the cost of the news print till the date of the letter. All this information collected from M/s. Capital Market along with a copy of the letter dated 25.2.98 was furnished to the assessee by Assessing Officer vide letter dated 27.2.98. In this letter, it was proposed that since M/s. Capital market has denoted having received back the stock the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of search for this assessment year, never the less the. income of E7,50,000/- is assessable as undisclosed income. Against this, the assessee is in appeal before us. 6.2 The ld. Authorised Representative for assessee submitted that the Assessing Officer unilaterally relied on the version of capital market. Whereas, one, Raju had acted as the medium through which the newsprint was returned and he had also filed a confirmations letter dated 26.08.1995 from Raju. Statement of Raju was rejected without even examining him. No case for addition in assessee's hands and no benefit had accrued to assessee u/s.28(iv) as stated by the Assessing Officer. 6.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 6.4. We have heard both the parties and perused the material on record. In this case the issue was remitted back to the file of the Assessing Officer by Jurisdictional High Court vide judgment in T.C.No.1172/2005, dated 19.07.2012 for the purpose of affording sufficient opportunity of hearing to the assessee to substantiate the claim. Inspite of giving opportunity to the assessee on 14.12.2012, 07.01.2013, 28.01.2013, 05.02.2013 and 19.02.2013, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on this count. Being so, there is no change of circumstances to take different view. Accordingly, we confirm the addition made in this issue. This ground of the appeal of the assessee is rejected. 7. The next ground raised by the assessee is with regard to E1,50,000/- as advance paid to Mr. Vivek which was treated as undisclosed income by the Assessing Officer. 7.1 The facts of the case are that the assessee advanced E1,50,000/- to Vivek for which the source has not been explained. Hence, the Assessing Officer treated the assessee as undisclosed income. 7.2 The ld. Authorised Representative for assessee submitted that considerable agricultural income for the family has been explained earlier available for expenses apart from other receipts reflected in the cash flow statement. 7.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 7.4 We have heard both the parties and perused the material on record. The assessee filed cash flow statement. We have gone through the cash flow statement. Which is reproduced herein below. CASH FLOW STATEMENT 7.5 We find there is no entry with regard to advance to Mr. Vivek in the cash flow statement. Being so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or its Construction assessee has debited an amount of E26.50 lakhs during 31.3.95 and E18.25 lakhs during the year ended 31.3.96. No books of accounts are maintained by the assessee in respect of the house construction. For the purpose of evaluating the cost. of construction of this property, a reference was made to the Valuation officer of the Department. The Valuation officer in his report has estimated the cost of construction at E49.94 lakhs. Thus between the value estimated by the Valuation officer and the cost admitted there is a difference of E5.19 lakhs, The assessee was asked to offer his explanation for the difference in this respect vide this office letter dated 04-03-98. A letter was filed by the assessee's representative on 11.03.1998 stating that the explanation is available in the cash flow statement. However. the cash flow statement has already been rejected as unreliable. The explanation is rejected. Therefore the difference of E5.19 lakhs is treated as assessee's undisclosed income. Against this, the assessee is in appeal before us. 9.2 The ld. Authorised Representative for assessee submitted that reference to DVO for estimating the cost of construction in procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years 1990-91, 1991-92 and 1992-93. However as per block return in form No.2B he had admitted an income of E21,000/-, 16,000/- and E19,000/- after deduction u/s 80L of E7,000/- for the assessment years 1990-91, 1991-92 and 1992-93 respectively. The assessee was specifically asked as to how he was meeting his personal expenses, since with effect from 15.11.88, the assessee had resigned his job with the Government of Tamilnadu and he had no ostensible source of income. The query stands not answered before the Assessing Officer inspite of giving a number of opportunities to do so. The gross income of E21,000/-, admitted by the assessee in the block return represents interest on fixed deposits with Canara Bank for the assessment year 1990-91. This amount of interest has not been admitted withdrawn. Hence, even this amounts is not available for his personal expenses. Therefore, the personal expenses has been met by the assessee out of undisclosed sources. Therefore, the Assessing Officer estimated E4,000/- per month i.e E48,000/- and E21,000/- interest from bank admitted in block return in form 2B and Assessing Officer made an addition of E69,000/- as undisclosed income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income of the assessee by Assessing Officer for the assessment year 1997-98 comprised in the block period. Estimated Value Rs 1. Soni Colour TV26 : 1No. 30,000/- 2. Soni Colour TV24 : 1No. 25,000/- 3. Soni Colour TV18 : 1No. 20,000/- 4. Pioneer Audio Set : 1 No. 20,000/- 5. CD-CDS Laser jet : 1 No. 20,000/- 6. National AC 1 Ton : 2 Nos. 30,000/- 7. General Split A/c : 1 No. 50,000/- 8. General A.c -1 ½ ton : 1 No. 20,000/- Total 2,15,000/- Thus Assessing Officer treated E2,15,000/- as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 11.2 The ld. Authorised Representative for assessee submitted that no estimated addition is possible in block assessment unless it is relatable to evidence found in the course of search as to the unexplained nature of expenditure or investment. The assessee has shown drawings in the cash flow as well as the years in which the regular returns were filed. A mere summary rejection of it cannot be a ground to hold that the amount invested is the undisclosed investment of the assessee. 11.3 The ld. Departmental Representative relied on the orders of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h flow statement is arbitrary and merely based on surmises. No independent enquiry was made by the Assessing Officer to falsify the source for the investments given in the cash flow. A mere summary rejection of it cannot be a ground to hold that the amount invested is the undisclosed investment of the assessee. Further, the loans were supported by confirmation letters which were rejected without any examination. 12.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 12.4. We have heard both the parties and perused the material on record. In the cash flow statement these deposits was not reflected in the respective assessments years. Being so, it is treated as undisclosed income of the assessee. This ground of the appeal of the assessee is dismissed. 13. The next ground raised by the assessee is with regard to investment of E1,00,000/- for the assessment year 1991-92. 13.1 The facts of the issue are that the assessee made an investment of E1 lakh in Unit Trust of India during the assessment year 1991-92. The assessee was asked to explain the source for the investment. The assessee submitted the cash flow statement which has been rejected by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r E25,000/- and 31.03.1996 for E30,000/-, totaling to E1,20,000/-. Being so, we find that the assessee has explained this expenditure and accordingly, this addition is deleted. This ground of the appeal of the assessee is allowed. 15. The next ground raised by the assessee is with regard to investment in Tamilarasi for E52,500/- which was treated as undisclosed income by the Assessing Officer for the assessment year 1992-93 15.1 The facts of the issue are that the assessee commenced his propreitory business of M/s. Tamilarasi Publications during the year with an admitted capital investment of E52,500/-. The assessee was directed to explain the source of this capital investment vide department letters dated 02.07.1997 and 20.02.1998. The assessee has not explained the source. Hence, the Assessing Officer treated E52,500/- as undisclosed income of the assessee. 15.2 The ld. Authorised Representative for assessee submitted the explanation is given regarding source of fund in the cash flow statement. The reason given by the Assessing Officer to discredit the cash flow statement is arbitrary and merely based on surmises. 15.3 The ld. Departmental Representative relied on the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the cash flow statement The reson given by the Assessing Officer to discredit the cash flow statement is arbitrary and merely based on surmises. 17.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 17.4 We have heard both the parties and perused the material on record. An amount of E2,12,000/- was reflected in the cash flow as on 31.03.1993. Being so, the addition cannot be made. Hence, we delete the addition made by the Assessing Officer. Accordingly, this ground of the appeal of the assessee is allowed. 18. The next ground raised by the assessee is with regard to interest suspense account of E4,23,460/- for the assessment year 1995-96. 18.1 The facts of the case are that there was a credit of E4,23,460/-under the head interest suspense. The details in respect of the same was not furnished by the assessee, though the department has called for the same vide letter dated 25.02.1998. Therefore, the Assessing Officer treated E4,23,460/- as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 18.2 The ld. Authorised Representative for assessee submitted that there was actually a debit balance in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E5,76,000/- and E 4,16,000/- as undisclosed income of the assessee. Further, in Tamilarsari publication account is credited with E5,00,000/- in the name of S.N. Chandrasekaran and E1,50,000/- in the name of Ms. Geethanjali. Earlier, there were debit balance against these names for identical amounts. At a later stage on 9.3.1998, the assessee field a letter alongwith with confirmation letters from S.N. Chandrasekaran and Ms. Geethanjali. The letter does not in clear terms explains the credit worthiness of the persons and the exact source such as bank account etc from which was paid. These persons were not produced before the Assessing Officer. The confirmation letters are not given any credence. Since, there is no evidence regarding the repayment of these loans by these individuals the credits in their accounts are treated as assessee's undisclosed income. Against this, the assessee is in appeal before us. 19.2 The ld. Authorised Representative for assessee submitted that confirmations letters from these parties and the Assessing Officer treated these credits as not genuine without any sort of examination of the parties concerned. The onus cast on the assessee of proving the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.4.1995 from the said Mr. Thomas Yip addressed to the assessee no proof has been furnished in the respect. The letter of Thomas Yip was not produced it till 09.03.1998 when the matter regarding payments to credit cards was brought to the notice for explanation on 02.07.1997 itself. As regards merits, as per the letter of Mr. Thomas Yip, who is from Hongkong, allegedly fell ill suddenly in London and the assessee attended to his medical needs the expenditure for which was debited to his account with credit card. The bills debited to his account are as under:- Date Amount in US $ 11.1.1995 3228 13.1.1995 375 16.1.1995 626 18.1.1995 1260 27.1.1995 153.02 The assessee has not adduced any evidence such as copies of hospital bills etc. to show that the expenditure was incurred on Mr. Thomas Yip and that the payment was in fact made by Mr.Thomas Yip. No details of source such as debit to a bank account of Mr. Thomas Yip etc., have been furnished to substantiate the claim that the payment was in fact made by Thomas Yip. No details of source such as debits to a bank account of Mr.Thomas Yip etc have been furnished to substantive the claim that Mr. Yip made the payment. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,000/- (c) Advertisement exp. Display : Rs.18,000/- (d) Moulis Advertising : Rs.2,26,341/- (e) 2 publications : Rs.3,00,000/- (f) C C Display expenses : Rs.45,000/- (g) Dhina Thanthi : Rs.45,000/- (h) Excellent 2 publicities : Rs.4,30,642/- Total Rs.13,09,983/- The Department vide letter dated 25.2.1998 the assessee was asked to prove these details towards advertisement in the light of the observations made by the Special Auditor. The case was posted for hearing for this purpose on 02.03.1998 by Assessing Officer. The assessee has not furnished any proof in this regard. M/s. Excellent 2 Publication. M/s. 2 Publicities have confirmed the transaction with the assessee and the same was allowed. The transactions with M/s. Moulis advertising also was checked up and they have confirmed the transaction. The total expenses claimed by the assessee as payment to Moulis is E2,26,341/- only. The assessee has filed vouchers for payments of CC display also. Out of total amount of E16,77,646/- a sum of E1,08,000/- which is not proved by the assessee is disallowed. Further, special auditor has reported that advertisement expenses to the extent of E52,055/- are not supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E2,06,794/- . During the course of discussion with the ld. Authorised Representative for assessee it transpired that this liability is not proposed to be paid off. In view of this, the amount of E2,06,794/- is reduced from the block of assets and the deprecation at 25% is disallowed, which works out E51,699/-, Apart from this, sale of a van was wrongly credited to sales a/c. in the books of Tamilarasi Publications. This mistake was pointed out by the ld. Authorised Representative for assessee in a revised computation of the income returned by the assessee in the block return. While deducting this from taxable income depreciation @20%. The Assessing Officer treated E68,799/-, E52,454/-, 193,612/- and E1,45,756/-, totalling E4,60,000/- treated undisclosed income of the asseseee. 21.7 With regard to disallowance u/s.40A(3) to the tune of E1,33,365/- which was treated as undisclosed income by the Assessing Officer, the facts of the case are that in the special audit report the payment of E38,365/- , 48750, 16,250/- and 30,000/-/- is made in cash on 11.10.1993, 14.06.1995, 15.06.1995 and 01.07.1995. The ld. Authorised Representative for assessee in his reply dated 9.3.1998 has stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated E2,00,000/- as unexplained investment of the assessee for the year ending 31.03.1996 and accordingly assessed the investment as undisclosed income. 22.2 The ld. Authorised Representative for assessee submitted that the possession of jewellery was explained in the net wealth statement of the assessee. Further, the source is available in the cash flow statement filed by the assessee. A summary rejection of the cash flow by the Assessing Officer will not render the amount as unexplained investment. 22.3 The ld. Departmental Representative relied on the orders of the Assessing Officer. 22.4 We have heard both the parties and perused the material on record. In the cash flow statement for the year ending 31.03.1996, this amount of E2,00,000/- was not reflected in the cash flow statement filed before us. Being so, the addition of E2,00,000/- is sustained. This ground of the appeal of the assessee is dismissed. 23. The next ground raised by the assessee is with regard to foreign travel expenses to tune of E31,42,000/- which was treated as undisclosed income by the Assessing Officer. 23.1 The facts of the case are that the assessee made a foreign trip to Singapore, Hongkong and P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years 1995-96, the assessee's total foreign tour expenses is E7,52,000/- and for the assessment years 1996-97, the assessee's total foreign tour expenses is E10,10,000/-. The Assessing Officer treated the amount as undisclosed income of the assessee. Against this, the assessee is in appeal before us. 23.2 The ld. Authorised Representative for assessee that in the scheme of block assessment there is no scope of estimation of expenses unless it is evidenced by material found in the course of search. It can be seen that all foreign travel expenses are estimated by the Assessing Officer and hence all the additions are to be deleted as not emanating out of search and hence cannot be considered as UDI computed u/s.158BB of the Act. Further, the air ticket and expenses in India alone were met by assessee and duly reflected in the cash flow. All expenses relating to stay, food and travel in abroad were met by his business hotels, friends, and well -wishers in those countries. The explanation furnished by assessee in this regard in the source of assessment was summarily rejected by the Assessing Officer had restored to an estimate of the expense which is not in consonance with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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