9911796707
TMI Blog2003 (12) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... (i.e., grounds 2(a) to 2(d) of the original grounds of appeal). 2. This appeal came up for hearing many times before the Bench and finally it was taken up for hearing on 20-2-2003. Since the assessee could not complete the submission, the case was adjourned to 24-2-2003. It was heard again on 24-2-03 and 25-2-03 and on this occasion, the departmental representative submitted that he would require the presence of the Assessing Officer while making the submissions and sought adjournment to 3rd week of April, 2003 since the Assessing Officer would be busy with time-barring assessment. On the basis of the above request, the Bench directed the assessee's counsel to file the written submission and supply a copy thereof to the departmental representative in advance, and the departmental representative was directed to file the reply before the next hearing date and the matter was adjourned to 22-4-03. The Bench did not function on that day. The matter was again posted to 19-5-03. When the matter was taken up for hearing on 19-5-03, a request for adjournment by the Department was placed before us, which reads as under : "Since no one else is conversant with the case, please forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 132 of the Income-tax Act in the case of the assessee. During the search and seizure action, Revenue recovered substantial quantity of cash, jewellery and documents evidencing investments in movable and immovable properties, bank deposits in the names of the family members, namely, mother, children and some of his associates. The search was spread over different places where the assessee had interest, but the main places were (1)M-26, 10th Street, Anna Nagar, Madras and(2)Assessee's Official Chamber in TAMIN, No. 31, Kamarajar Salai, Chepauk, Madras-5. 6. Assessee was assessed under City Circle-VI (Inv.) Madras. By a notification of the Commissioner of Income-tax, Madras and CCIT-II, Madras in C.No. CCA: 160(1)96-97/CC-II/A(2)/96-97 dated 16-5-1996, this case was notified to the Assistant Commissioner of Income-tax, Central Circle-II(5), Madras. Subsequently, by Notification F. No. 2003/96-97 dated 27-8-1996 of Director General of Income-tax (Inv.), the case was notified to the Asstt. Commissioner of Income-tax, Central Cir. II(4), Madras from the Asstt. Commissioner of Income-tax, Central Cir.II(5), Madras. Subsequent to the search and seizure action that took plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to produce the donors of a trust (of which he was a trustee) but he never complied. Similarly vide para 1.10 of his order, the Assessing Officer records that certain important documents were seized from the assessee's briefcase and on asking whether the notings on those documents, which according to the Revenue, are in assessee's handwriting, are his, he neither denied nor confirmed it. Meanwhile, there was CBI search in the office of the assessee's Auditors and certain documents were seized. The assessee delayed or did not produce information inspite of having the original documents on the ground that the copies were taken by the Investigating Party, according to the Revenue. Another example cited in para 1.12 is that the assessee filed an Affidavit signed by his mother. Since the genuineness of this document was in doubt, the assessee was asked to file its original for verification. By his letter dated 17-12-1996, he refused to produce the original document on the ground of "genuine fear of destruction of the impugned document". Similarly, a Will of his late father had been referred to in the said Affidavit. Though the original Will was called for, the assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Anna Nagar house, which, according to the Assessing Officer, establishes the factum of the change of residence. Secondly the Assessing Officer notes that the log-book of the car of TAMIN showed that the assessee was daily picked up and dropped at this house. In voters' list also, this address is given by the assessee. Assessee holds a revolver licence which has been issued at the address of the Anna Nagar house. In the assessee's passport issued by the Passport officer, Madras, the permanent address is given as Arasangudi Village & P.O. Trichy Dt., Tamil Nadu whereas the present address given is that of Anna Nagar house. Assessee is a member of a Club. Again the address given in the membership card is that of Anna Nagar House. The medical bills claimed by the assessee also indicated the same address. In view of the above, the Assessing Officer concluded that the assessee's contention that the search warrant has been issued at a wrong address was a motivated one because the assessee wanted to escape from explaining the cash, jewellery and other related documents seized from the Anna Nagar House. 9. We have gone through the written submissions of the assessee and the reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidents of the locality as witnesses. (c)Right to have a copy of the panchnama together with all annexures. (d)Right to have a copy of any statement that is used against him. (e)Duty to see the warrant of authorisation and put his signature. The ld. representative of the assessee submits that in the instant case of the assessee, assessee was not allowed to go through the copy of the Warrant of Authorisation during the search but was asked to put his signature on the promise that the same would be furnished to him after the search. But the same was not done. Since the search was not in conformity with the mandatory rules of the search, it is bad in law. Further, rule 112(6) had not been complied with because there were no respectable inhabitants of the locality as witnesses. The assessee was not given the right to have at least two respectable and independent persons from the locality to witness the search and seizure action. The Department brought two strangers of their choice to act as witnesses. They were two bank officials, one from National Housing Bank and the other from Canara Bank at Mount Road, whereas the search was in Anna Nagar. Copies of the statements recorded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In a way the rule 112(6) of the Income-tax Rules, 1962 and section 104 of the Criminal Procedure Code are different. The word "independent" is missing in rule 112(6). Income-tax Act is a specialised Act which overrides the provisions of a general law such as Criminal Procedure Code. Obviously, the word "independent" is also to be read into this rule not to impediment the search. It only gives an indication that as far as possible, an employee, partner, director or close relative of the assessee or associate should not be taken as a witness. In the case of Emperor v. Darshan Singh AIR 1941 Lahore 297 it was held that the provisions relating to the locality should be regarded as directory and not mandatory. The only restriction is that the authorised officer should make an honest effort to secure presence of respectable persons of the locality. It was held in the case of Queen Empress v. Raman ILR 21 Mad. 83 that the witnesses are to be selected by the authorised officer and not by the assessee. If the witnesses are credible persons in the eyes of law, it cannot be said that they are not respectable for such purposes. In the light of the above discussion, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected as rightly noted by the Asstt. Director (Inv.) that as per law if any paper is to be used against the assessee, the department has to give the assessee an opportunity in that regard. At the most what can be said is that these papers cannot be used against assessee and they should be segregated and kept separate. But this will not be sufficient to hold that the search itself is illegal and invalid. This may be at the most a procedural impropriety which does not and will not make the entire search a nullity. In view of the above, this legal plea of the assessee on this point is also to be decided against the assessee. Ordered accordingly. 13. The assessee is also attacking the legality of the search on the ground that the filing of the return itself was not on the basis of a voluntary return. The submission briefly is as under : Filing of return in Form 2B under block assessment is not a voluntary return. Notice under section 158BC was served on the assessee while he was in Central Prison under FERA charges. The assessee did not have access to his Auditor nor could he have access to the seized records. He was released from prison on 13-8-1996. It is the submission of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. In this view of the matter, this plea of the assessee is liable to be dismissed. Ordered accordingly. 15. Another legal objection taken by the assessee is with regard to two appraisal reports. The case of the assessee is that the whole assessment seems to have been done on the basis of the second appraisal report after six months of the search. It is also the case of the assessee that this appears to be the main factor why the superior officers were interfering and supervising the assessment proceedings conducted by the Assessing Officer. It is to be noted that if in one appraisal report some of the points have not been considered, it is an internal matter. The revenue authorities can always seek a second appraisal report pointing out the mistakes or something that has been omitted in the first one. This will not vitiate the entire proceedings as such. 16. The assessee also assails the block assessment on the ground that the assessment proceedings were not conducted in an independent and judicious manner, and there was interference by the superior officers which is strictly prohibited. The Assessing Officer was not acting independently but was guided by his superiors and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically say that such things only should be prepared and taken by the Assessing Officer. 18. Considering the rival submissions on this point, we are of the view that the view canvassed by Revenue is to be accepted. Under Chapter XIV-B, undisclosed income for the block period is computed under section 158BB. It reads : "S. 158BB(1) : The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of this Act, 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, 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, determined, . . . ." A reading of the above provisions make it clear that the aggregate total income of the assessee for the block period is to be computed in accordance with the provisions of this Act on the basis of the evidence found as a result of the search or as a result of the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e names of the assessee's relatives were unearthed. Assessee was asked to explain the source of investments. Vide letter dated 16-10-1996, assessee's representative, CA, filed the reply along with a copy of an Affidavit signed by assessee's mother, Smt. Dharmambal. It was signed and recorded as a true copy. Assessee was asked to produce the original of the Affidavit to consider the genuineness of the Affidavit. Also the assessee was asked to produce the original will of the assessee's father said to have been left behind by him. There was no response. Subsequently, summons was issued on 24-10-1996. Further letter was issued on 6-1-1997 stating that unless the original is produced, judicial cognizance of the document cannot be taken. There was no reply till 7-1-1997. However, subsequently, the assessee filed a letter stating that no evidences were available in support of the claim that the assessee's mother was having substantial income (as recorded in para 6.3). However, the assessee asserted that the assessee's mother being a leading Gynaecologist and practicing doctor, she had earned substantial income. The Assessing Officer did not take cognizance of the above submission also on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before revenue because revenue used third degree methods against the Notary Public. The Assessing Officer with the help of Asstt. Director of Investigation, an Inspector of the Department and a Sub-Inspector of Police used third degree methods while cross-examining the Notary Public who attested the Affidavit of Dr. Dharmambal, assessee's mother. They kept the Notary Public in between the above two officers and extracted the statement under coercion and threat to suit their purposes. According to the assessee, this has been clearly brought out in question and answers 64 and 65 in cross-examination recorded in the assessment order. In cross-examination, answering question No. 65, the Notary Public stated that "I have put the date as 29-1-1996 only I must look into the Register to confirm the date". It is also the case of the assessee that by keeping the Notary Public in between an Inspector of Income-tax and an Inspector of Police, he was mentally pressurised to extract the answers revenue expected to have from him. For example, the Notary Public was asked about the source of Sumo Car purchased and also the income for the performance of heart-surgery. It is the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are close relatives and many of them were not even aware of the existence of such a trust. It is also the submission of Revenue (Paper book page 4 - ground No. 6) that there was no questioning of assessee's mother as she passed away in July 1996 before the filing of the Affidavit. It was the duty of the assessee to satisfy the Officer of the genuineness of the Affidavit. In the absence of such positive action from the side of the assessee, the Assessing Officer carried out a detailed investigation making enquiries with Notary Public, stamp vendor, assessee's C.A., assessee's mother's doctor and others. After examining all these persons, the Assessing Officer rightly came to the conclusion that the affidavit could not be taken note of, considering the facts and circumstances of the case. 22. Considering the rival submissions, we are of the view that this issue has to be dealt with while discussing the matter, on merit, with regard to additions. Coming to the assessee's plea that all the evidences taken are to be treated as sham and make-believe evidences collected by Revenue, with a pre-determined mind to fix the assessee, and cannot accepted only on the ground that the Notar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the seals did not know the signature of the witnesses in whose presence the seals were put after the seizure though the seals were said to be in tact. This clearly depicts the contents of the Panchnama. As there was difference in the cash seized, assessee genuinely doubts the veracity of Panchnama and believes that the same irregularity could have happened in other areas and documents seized also. Since the Panchnama is not reliable and does not depict the clear picture, it is only a scrap of paper and no assessment could be made on the basis of such Panchnama. Hence, it is the case of the assessee that the entire proceedings were vitiated. So also, it is the case of the assessee that the list of foreign currencies found and seized as per the Panchnama shows US $ 5,111 as per Annexure-A. However, in the assessment order, the foreign currency seized is recorded as US $ 5,061 (page 142 of the assessment order). On this ground also, the assessee submits that the Panchnama has no value. It is the case of the assessee that as per rule 112(12), the Custodian has to take steps. He may consider necessary for the safe custody all the books of account or other documents and the package and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of search. At the same time, when the assessee stated that some other items belonged to TNBA, they were seized. This clearly indicates the mind-set of Revenue Authority, and the search was conducted according to the whims and fancies with the ulterior motive of making the Panchnama a document of invalidity. Assessee's representative submits that the statement in Mahazar that before opening of the boxes, the seals were found intact, in fact, cannot be accepted as a true statement. The circumstances lead to a powerful suspicion that it is an insertion because the writing is in small-hand in companing to the rest of the document and therefore, would have been written afterwards. The cash was deposited on 23-1-1996. Vide letter dated 25-1-1996 cited above the Asstt. Director of Income-tax (Inv.) mentions that Mahazar was drawn to certify that the seals were found in- tact. In fact, the Mahazar was not drawn for this purpose but to certify a Mahazar. When the amount seized was recorded and taken note of bundle-wise, number-wise and denomination-wise it is a wonder how an amount of ₹ 4,65,650 was found in excess. Assessee's representative submitted that these bundles were perhap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to assail the assessment order itself, because the assessee had not complied with the statutory requirement which was the assessee's duty at that point of time. Thus, the plea of the assessee that some manipulations had taken place at the time of preparing the mahazar is a belated plea that cannot be taken note of. This legal ground of the assessee is also overruled. 28. Assessee is also assailing the block assessment. On other grounds as well assessee's representative submitted that a perusal of the Panchnama would show that the search has not been concluded so far. It is a valid document and based on details in Panchnama the investigation as well as the assessment in a search case is to be finalised. The search was commenced at M-26, Anna Nagar on 19-1-1996 at 8.20 AM and it was temporarily closed on 20-1-1996 at 5 PM. This can be seen from item No. 10 of page 2 that the words recorded are "search continues". Assessee is not aware whether the search has been concluded or whether it continues, because it is mentioned that the "search continues". If that be so, one wonders whether block assessment under Chapter XIV-B is possible at all or not. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the search was commenced on 19-1-1996. The documents and the assets undeclared found as a result of search upto the date of the commencement of the search can only be considered and included and not upto the conclusion of the search. In view of the above, we do not find much credence in the submission of the assessee that "search continues" and therefore, the block period cannot be fixed accurately. 31. Another contention taken by the assessee is with regard to the application of mind by the Officer. Assessee's representative submitted in the instant case that the draft assessment order was forwarded to the Commissioner for approval on 28-1-1997. The draft order runs into 156 pages with 120 pages annexures. It is humanly impossible to give approval within two days. The order was served on the assessee on 31-1-1997 which shows that there was no application of mind. Assessee's representative, Shri Ravi, submitted that the power exercised by the Commissioner is a quasi-judicial function and not an administrative function. No hearing was given to the assessee. There was no time for application of mind. It is well-settled that as per the rule of modern administrative law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive function of the Commissioner. The provisions of section 158BG do not contemplate that the Commissioner should come face to face with the assessee while according approval for the proposed assessment under Chapter XIV-B of the Act. Apart from the language of the provision, the nature of the functions confided to the Commissioner is inconsistent with the application of the principles of natural justice". In view of the above, this plea of the assessee is also rejected. 33. The first objection of the assessee, on merit, is directed against the order of the Assessing Officer in making an addition of ₹ 38,95,74,550. In the original grounds of appeal, this ground is numbered as ground Nos. 3(a) to 3(j ). It is the case of the assessee that the Assessing Officer was wrong in assessing an aggregate sum of ₹ 38,95,74,550 in the various previous years comprised in the block period, alleging the same to be the assessee's income from "collections from applicants for mining licence". It is also the case of the assessee that the Assessing Officer erred in relying on certain paper slips alleged to have been found in three brief cases found in the Anna Nagar House. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the assessee that TAMIN is a wholly owned company of Govt. of Tamilnadu and it had no role to play in the matter of sanctioning the licences. He sought a week's time to give further explanation after consulting the Granite Association. However, he gave the name of the President of the Granite Association as one Mr. Badrinarayanan of M/s. Enterprising Enterprises. The relevant questions and answers are reproduced by the Assessing Officer at pages 11 and 12 of his order. Answering question 71 the assessee says, as noted above, that the sheet contains the details of licence, quality, price level and subscription details. He further states that these details are inter-changed because TAMIN and the Association are working on the same plain to regulate the losses. He further submits that he does not live at M-26, Anna Nagar. The next question No. 72 reads as under : "Q.72 : Please explain the L.S.93 of the above annexure which contains the following noting of Evershine Enterprises : No. 22886 MB/94 500 × 400=2,00,000 100 × 2500=2,50,000 4,50,000 Ans.: These details can be explained only in consultation with association officer." Assessee was ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am now showing you seized materials No. NGN/B&D/LS/S-15 which is a letter head of TAMIN. Sheet Nos. 1 to 20 gives in your handwriting name of the quarry owner, site survey No. acrage and amount. This was also seized from M-26, Anna Nagar from your brief case. Please describe these documents. It also gives details like 57th list, 58th list, 59th list and so on upto 73. Please explain." Assessee replies after giving certain details regarding the documents shown, that M-26 does not belong to him and it is not correct to say that the said document had been seized from his brief case since the brief case said to have been at M-26 was not opened in his presence and the papers bunched together. Question No. 45 was specific and it reads as under : "Q.45 : Are you denying that this is in your hand-writing? Ans.: I am neither denying nor accepting and I want some more time to explain. I would like to place on record that my depositions recorded before the Asstt. Commissioner Central Circle II(4), Mr. T.V. Unnikrishnan are sent to Mr. Chowdhary, the Additional Commissioner of the same Department through the staff available in the room where the statements are recorded. It show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; are in my handwriting. But who deciphered the writings as "amount to come"; is it the Assessing Officer or the handwriting expert? If it is in my handwriting as claimed I am the only person who can say what I have written. The presumption on your part exposes the collosal prejudiced approach. You have not informed me nor questioned me before sending the seized document to an expert; normally in such enquiries the judicial procedure is the affected party is informed which document is sent in what form it is sent to whom it is sent and for what purpose it is sent. Without questioning me to ascertain whether it was in my handwriting all these things have taken place as the question reveals. Whether the document referred viz. NGN/B&D/LS/S-12 contained this particular paper when seized from M-26 nobody knows nor it was questioned by the authorised officer on the day of seizure. Since it is informed that these seized documents have been referred to the handwriting expert I request I may be given a copy of his report with details how many documents were sent in what form and with what questions; only after going through the report it will be judicial on my part to continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nying or accepting aspect in this and the judicial authority is expected to give the copy if the judicial procedure is an open one. Hence, I request the copy of the expert opinion to be given to me before questioning in such documents. As already I have stated I shall confirm the contents after verifying with my sources." 35. The Assessing Officer held that firstly the assessee was reluctant in eliciting the truth of the document and the assessee was consistently denying M-26 at Anna Nagar as his residence so as to avoid the responsibility of discharging his duty to explain the seized materials from the residence of the searched person. The Assessing Officer further records that any-one can confirm or deny whether a particular writing is his own or not, and there cannot be a situation where it is neither denied nor confirmed. If it was not in the assessee's hand-writing, assessee would have denied. Vide para 3.11, the Assessing Officer explain the modus operandi and the device by which money was collected by the assessee. The Assessing Officer records, "to have a proper understanding of the significance of these materials one has to go into the procedure for grant of min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease on Government lands under rule 39, the following criteria can be adopted so that granite is exploited more on a systematic and scientific way to avoid waste and also earn foreign exchange to the country. 1.Export houses, Trading Houses, 100% EOUs can be considered for lease; 2.The parties who are owning granite procession factories can be considered; 3.These parties who are having international exposure will export the material at the most competitive rates; 4.The Government can exercise its discretion under this rule for the grant or renewal of lease if employment opportunities are generated by the lease and the local people benefited; 5.Entrepreneours having a clear export programme with documentary evidence if need be can also be considered the grant of lease under this rule may be restricted to discrete parties as indiscriminate mining by numerous parties may also cause undue competition, affect conservation of granites, backlog of stock and other setbacks." The Assessing Officer records that this proposal which suits anybody under any circumstance, was accepted by the Government and a High Power Committee was constituted vide G.O. No. 52, dated 10-3-1995. To t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be obtained, one has to approach Sri Dyaneshwaran and please him by paying some money. There was a clear proximity between the date of recommendation of a case and the time of payment by the applicant to the assessee. Vide para 3.20, it is recorded that even prior to 1995 i.e. before the introduction of High Level Committee, the assessee was having some access in granting licence. The Assessing Officer came to this conclusion based on the papers seized from the assessee with regard to the leasing of the quarry even prior to 1995. The Assessing Officer records vide para 3.21, though the assessee was claiming that he was only one of the members of the High Level Committee and even High Level Committee was only a recommendatory body, in fact, all the recommendations of the High Level Committee were accepted by the Government and even MLAs were not spared. It was under these circumstances that the Assessing Officer came to the conclusion that the unimaginable cash, jewellery and other investments in the names of the assessee's family members, found in the residence of the assessee, were to be considered. He records that the papers found can be generally divided into three groups i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble". Out of the seized documents, 164 documents are of the type mentioned in item (a) above, in 125 documents mentioned there are corresponding matching entries in one or both of the other two categories described above and the details relating to the mines mentioned in 70 records appear in all the three categories. Out of the total data available in respect of mines (995) for which the licences were applied, details of 132 mines appear in more than one list. He held that the amount mentioned in the coded decimal form is in lakhs and in thousands in many cases, and the coded amounts tally with the amounts mentioned in in the slips in the handwriting of the parties and/or their representatives and in some cases even the denomination for the amount was recorded. These were amounts paid by the applicants to the assessee for grant of licences. The Assessing Officer further held that it was neither humanly possible nor was it required under the law that in respect of each and every person money had been paid and received as per details noted in the seized documents. He further held that all that one can and has to establish was that there was a practice of collection of money for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ltd., Hyderabad, one Shri Sanjay Kumar, Chief Co-ordinator of M/s. Deccan Granites Ltd. was examined on 24-1-1996. He stated that he came to know that to obtain a licence for mining he was to pay something to the Chairman of TAMIN. He made the payment to one Shri Anbalagan. The slips seized were in the hand-writing of Shri Sanjay Kumar. The licences were applied for in the name of Shri Arjun Rao who was an employee of M/s. Deccan Granites Ltd. Shri Sanjay Kumar stated that after making the payment through Shri Anbalagan, within a short period he used to get approval. The Assessing Officer vide para 3.31 records that among the cash seized from the assessee's office premises at Kamaraj Salai, Madras, were 4 bundles of ₹ 100 denomination with bank slips of State Bank of Hyderabad, Hyderabad-12. He further records "On enquiry with the assessee, it is learnt that the assessee withdrew ₹ 8,00,000 in cash from State Bank of Hyderabad on 24-2-1995 out of which ₹ 3,55,000 was given to Shri Sanjay Kumar and debited to "Staff advance-Sanjay Kumar", with narration "cash paid to Sanjay towards K.Withe quarry and Madras travel expenses". It is the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is the legal owner of the house at Anna Nagar denied any knowledge about these documents in the course of his sworn statements. Assessee's failure to explain the contents of the seized materials only shows that the assessee was either not willing or possibly did not want to give any explanation because if any explanation was offered, that may be inconvenient to the assessee. The Assessing Officer also states that the claim of the assessee that the documents represented subscriptions from various members of the Granite Association was also false because the president of the Granite Association denied such a claim. From the above, he proposed three possible conclusions- (a)The first category comprises of slips given by the applicant for granting licences for mining granite and other minor minerals. These slips contain the particulars of the applicant, location of the mine, extent, survey number and the amount paid to the assessee. In many of the slips even the denominations of the amount paid is clearly mentioned. (b)The second set of records include records in assessee's own handwriting containing the particulars of the applicants and other details including the amount receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... razor's edge hurting your own feet when you indirectly accuse me of recipient of illegal gratification." Coming to the items i.e. (a) amounts paid and ( b) amounts recevied, as stated hereinabove, the assessee explains: "Like a cash credit in the books of account of a businessman, you had asked me to produce the persons whose names are found in the slips to show that they have not paid any money to me. You cannot shift the onus of proof to my burden. Your expectations do not have support from any legal angle. Regarding your conclusion that the handwriting in these papers are mine, I can only say it lacks legal support and sanction. Handwritings can be similar among individuals and dissimilar from time to time." Assessee further states that the Assessing Officer's conclusion that some amounts have been collected, which are not for any legal purpose is without any evidence. He states that it is only the Assessing Officer's guess work. Many documents were not shown to the assessee or questioned. Vide para 3.58, the Assessing Officer records that the assessee's reply indicates only assessee's negative attitude. The documents were seized from the assessee's bed-room an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tached to these conclusions. He also records that cross-examination is not admissible routinely whenever some-one is examined. If the assessee is not able to show any basis or reason or any inconsistency between the seized documents and the statements of the persons, why should these parties who have no stake in these proceedings be harassed further. The assessee has not made out any case based on any material for seeking cross-examination. The purpose of asking for cross-examination is to make the matters unworkable. He further records "Unworkability, impractibility of examination, cross-examination and re-examination of all the 1000 or so applicants apart, the primary evidence based on which the income is being assessed is the documents containing the details of the applications for grant of mining leases and the amounts noted therein found with the assessee. This initial explanation that they relate to collection by Granite Association has been proved to be false and he has not offered any other explanation later regarding the contents of these documents." Relying on the following decisions, the Assessing Officer held that cross-examination is necessary : (a) M.K. Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d opinion of the hand-writing expert. This was done without any notice to the assessee, and the results of these proceedings was not communicated to the assessee. Only at the time of taking the statement from the assessee, the assessee was informed of the handwriting expert's opinion that the handwritings were of assessee's. Mr. Ravi submits that it is not clear from the facts brought on record whether the papers said to have been seized were sent to Expert and whether any undisputed handwriting was sent to the Expert along with disputed handwriting in order to compare and come to the conclusion that the alleged slips were written by the assessee. In the light of the following decisions, the assessee's representative submits that this expert opinion cannot be relied on : (a) Jay Frozen Foods v. ITO [1992] 196 ITR 724 (Mad.). (b) CIT v. Chandan Wood Products [1996] 217 ITR 834 1 (MP). (c) ITO v. Dr. Anand Meenawat [1992] 43 TTJ (JP) 213 . 40. The second limb of the argument is that the Assessing Officer goes to the methodology for the grant of mining licence. He explains the change in the procedure made by the State Government and also the constitution of the High Level Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, there is no evidence, but only a pre-conceived notion. 42. Coming to the slips of papers which are dealt with in para 3.2 of the assessment order, Mr. Ravi submits regarding item (a) that one thing is clear. These are papers belonging to others. Examples of these papers are found in pages 1 to 3 of the Annexure to the assessment order. In fact, there is nothing to link the assessee with these papers except that they were found in the residence of the assessee's son and his family members. Coming to the finding of the Assessing Officer that the slips contain certain details of denominations of money, the assessee's representative submits that it is only a streatch of imagination and not on the basis of any corroborative evidence. Coming to item (b) above, assessee's representative submits that the Assessing Officer has come to the conclusion that prima facie these are in the hand-writing of the assessee in his own letter- head or that of the TAMIN. It is the case of the assessee that this evidence has neither been furnished to him nor he was offered an opportunity to cross-examine the expert nor was he informed that the papers containing assessee's alleged hand-writing have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stained unless it is proved with evidence that it is assessee's income. The Assessing Officer cannot take his duties lightly and say that it is not humanly possible to establish. It has to be established that the amount to be added is assessee's undisclosed income, if it is to be taxed. Reliance has been placed on the decision of the Supreme Court in the case of State of Orissa v. (Miss) Dr. Binapani Dei AIR 1967 SC 1269 wherein it has been held "if there is a power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power". It is true, the Assessing Officer is empowered to make presumptions, but the IT Act itself specifies the circumstances. In the instant case of the assessee, the Assessing Officer has to establish that the situation falls within the presumptive provisions and definitely the matter under consideration is not one coming under any of the presumptive provisions. The only presumption is that the papers seized belonged to the occupant of the residence and it is true. But it does not lead to the conclusion that the assessee had earned undisclosed income. The Assessing Officer cannot brush aside his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defined in the section. Even if it is the undisclosed income of the assessee, it is the duty of Revenue to establish corresponding investments. Even then the entire addition made, on the basis of jewellery, cash and other assets (movable and immovable) of ₹ 38 crores is much more than the value of such assets. In order to tax the income of others, represented by the value of the assets that stand in their names, the sections which are applied should be strictly adhered to and the Assessing Officer should show how the sections are applicable. This burden has not been discharged. Addition of undisclosed income cannot be made on the basis of presumptions and assumptions. 45. Section 158BB(1) is clear. The addition by way of undisclosed income should be made on the basis of evidence found as a result of search or requisition of accounts or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence ......". In the present case the only thing available with the Assessing Officer is the loose-sheets of dumb papers and nothing more. All other so-called evidence has been gathered only after the search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 11-1-1997 on the following lines : "On the face of it the assessee's claim is untenable. These documents were shown to the assessee for his comments at the time of search and subsequently for his explanation. Since they are seized from his possession and from his house he is bound to explain them under the provisions of section 132(4A)." The assessee was only asking for his right to cross-examine the persons whose statements have been used by Revenue against the assessee. As assessee has not been given this opportunity, it is a gross violation of the principles of natural justice. It is not known how assessee's request for cross-examination is an untenable request. The residence from where these materials were seized is not the residence of the assessee alone but is also the residence of his mother and his children. Hence, it is first vital to establish that these papers belong to the assessee and assessee alone. In para 3.60 again the Assessing Officer states that income is computed not on the basis of the statements recorded from various parties. If that is not so what corroborative evidence is there against the assessee. The above reasoning of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s giving the denominations. How another person's hand-writing can be used against the assessee? The alleged hand-writing of the assessee does not show as to whether the assessee received the money or paid it to somebody-else. In the case of C. Shukla (supra) the Hon'ble Supreme Court held that the notings in a third party's hand-writing cannot be used against the assessee. Even the alleged hand-writings of the assessee have not been proved by as demanded by the law. It is not clear how and on what basis Revenue is alleging that the hand-writings belong to the assessee. The additions are made on the basis of surmises and suspecions. The Assessing Officer speaks of substantial evidences against the assessee, but he does not specify the substantial evidences. It is only a guess work of the Assessing Officer. The Assessing Officer is bound to inform the assessee of the evidences which he was using to come to the conclusion that the assessee had undisclosed income. 49. The Assessing Officer speaks that the assessee's right to cross-examination can be allowed only if the assessee is able to show any basis or reason or any inconsistency between the seized documents and the statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asselics Catholicos v. Most Rev. Mar Palose Athanasivs AIR 1954 SC 526, that the mere destruction of the defendant's tile, in the absence of establishment of their own title carries the plaintiff nowhere. In other words, even if the assessees claim is rejected, that does not automatically lead to the conclusion that it has been established that everything belongs to the assessee. 51. Inviting our attention to paper book page 51, assessee's representative submitted another scenario. Let us agree that certain papers containing a list of names, places and numbers were seized. From these papers, nothing concrete or definite can be deduced. They are dumb papers. The assessee denies that the papers were found in his possession and control as they were found in the common residence of the family and in the house belonging to the assessee's sons. Assessee denies any connection with these papers sought to be explained. Assessee says that he needs to contact the President of Granite Association to have further information connected with the papers. Let us presume that the Assessing Officer has proved the assessee's explanation wrong that these papers do not belong to the assessee. Yes, it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment. Therefore, to presume that the entire receipt was assessee's is far- fetched and unwarranted conclusion. For the above proposition, the assessee relies on the decision in the case of Kishor Mohanlal Telwala v. Asstt. CIT [1999] 64 TTJ (Ahd.) 5431. The assessee's representative also submits that the observation of the Assessing Officer given in para 3.59 (page 40) is also without any basis. The case of the Revenue that because of his position the assessee collected money from the applicants and granted licence or helped the applicants to get licences is a case without any basis. Assessee's representative further submitted that the observation that the applicants whose names figure in the documents received the licence immediately after the payment is also an observation not founded on any basis. The above observation is not on the basis of any evidence but on the basis of inferences. Inferences, however, are not evidence. The Authority who gives the licence is different from the assessee. The Assessing Officer says his observation is based on incidental enquiries. As far as enquiries are concerned, the cardinal principles of jurisprudence is that the assessee against whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of mining licences whose details is are given in annexure-B to this order are treated as the income of the assessee which was not disclosed and it shall be included in the total of the assessee". It is to be noted that the Assessing Officer has nowhere alleged that the persons in whose names the properties exist are the benamies of the assessee. 54. In short, the perusal of the entire assessment order makes it clear that the assessment order was passed with a biased mind, not on the basis of the records or evidences but purely on the guess that everything belonged to the assessee. Without giving an opportunity to the assessee to rebut the charges against him is a nullity, so held by the Supreme Court in the case of Shaduli Yusuff ( supra). Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Surinder Nath Kapoor v. Union of India [1988] 39 Taxman 374 wherein the Court held "there can be no doubt that when an order is made for the payment of fictitious sum without giving an opportunity to a person, against whom the order is made, to show cause against the passing of such an order for the said sum, the order is a nullity. In other words in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would amount to violation of assessee's fundamental rights. Assessee's representative also relied on the decision of the Tribunal (Patna Bench - Third Member) on Girdhar Agency's case (supra) wherein the Tribunal held that such material which is sought to be used as evidence without observing the principles of natural justice should be excluded from evidence. 55. Assessee's representative also submitted that on the basis of the facts also the Revenue's case cannot stand legal scrutiny. He submitted: (a)In almost all cases the person who has been said to have carried the money for payment is different from the owners of the business undertaking and there is no evidence whether these persons have actually paid these amounts to the assessee or done something else with the money. (b)Secondly, the persons who are said to have paid money are dealing with corrupt practices and therefore their moral integrity cannot be assured. They claim to have paid money to the assessee but there is no evidence. What they stated is not verifiable and therefore their statements have no evidenciary value. These third parties who are said to have paid the money to the assessee have not been question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. First he distinguished the decision in the case of M.K. Thomas (supra). This was a case where the decision was concerned with best judgment assessment under section 17(3) of the Kerala Sales Tax Act. In this case, the Court clearly held that there was no case for the assessee that the Sales-tax Officer had not afforded the assessee an opportunity to cross-examine when he demanded such an opportunity. In that case, there was no case that the Petitioner was denied the right of cross-examination nor he was entitled to cross-examination. Assessee's representative refuted the finding of the Assessing Officer that in that case the Court also observed that section 17(3) of the S.T. Act is equal to section 23(3) of the Income-tax Act. For the above submission, the assessee relied on the observation of the Court contained at page 282. Analysing this case in K.T. Shaduli Yusuff (supra), the Hon'ble Supreme Court observed "We, however, find that so far as the present appeals are concerned, they are governed by the provisions of the Kerala General Sales-tax Act, the provisions of which are not quite identical with the provisions of the Income-tax Act, and the Kerala Act appears to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements gathered subsequently by the Assessing Officer, such statements should be made available to the assessee. This request was to be acceded to, since it is very essential for equity and fair play. They had not been given to the assessee. Only at the time of hearing, it was stated before the assessee that certain documents have been relied on against the assessee, and the assessee was asked what he wanted. Such action of the Assessing Officer does not amount to allowing a reasonable opportunity. On the other hand, coming to the decision of the Supreme Court in the case of C. Vasantlal & Co. (supra), assessee's representative submitted, the Court, in this case, held that if the Assessing Officer desires to rely on any material or information collected, then the assessee should be given adequate opportunity to defend himself against such materials. (This decision has been considered by the Tribunal in (sic) 64 ITD 21 (Patna - Third Member). Assessee's representative also distinguished the decision relied on by the Assessing Officer in the case of Kanungo & Co. (supra). It was a case where foreign watches were seized. There was no doubt in that case that the watches were brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls. Ultimately, the decision went against Bakshi Gulam Mohamed for the reason as observed by the Supreme Court "We have to remember that we are dealing with a statute which permits a Commission of Inquiry to be set up for fact-finding purposes. The report of the Commission has no force proprio vigore". The assessee's representative submitted that in the assessment proceedings like this an order is passed against an assessee which is enforceable in law whereas the finding of the enquiry commission is not binding in nature. Thus, he distinguished the above case. 59. The assessee's representative relied on the decision of the Supreme Court in the case of Shaduli Yusuff (supra) for the proposition that unless an opportunity to cross-examine is given, the evidence cannot have any value. In this case, the Hon'ble Supreme Court held "It is difficult to conceive as to how the assessee would be able to disprove the correctness of the accounts of Haji P.K. Usmankutty or the other wholesale dealers, unless he is given a chance to cross-examine them with respect to the credibility of the accounts maintained by them. It is quite possible that the wholesale dealers may have menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n unless the party is put on notice of the case made out against him. Assessee also relies on the decision of the Madras High Court in CIT v. Gani Silk Palace [1988] 171 ITR 373 2 wherein the High Court held that the ITO ought to have given an opportunity to cross-examine the bankers, whose statements, the ITO wanted to rely on, before taking into account the contents of those statements. Thus, the assessee's representative concluded that in the light of the above submissions, the addition made on account of collection from the applicants for mining licence is to be deleted. 61. As against this, Revenue made the following written submissions: (a)"In the course of search, cash to the extent of ₹ 15,58,900 was found in the bed room of the assessee's Anna Nagar residence. Cash to the extent of ₹ 1,48,65,650 was found in the cabin of assessee's office of TAMIN. The assessee took a stand that the money seized from his office cabin belongs to Tamilandu Basket Ball Association, of which he was the Chairman and Chief Patron and that the amount was collections made as stop gap loans from various persons pending release of money by the Tamilnadu Government. The lenders we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the aforesaid, the Assessing Officer correctly held that the investments/payments are from the unaccounted income of the assessee only. Ground 3 - Addition of ₹ 38,95,74,550 The addition of ₹ 38,95,74,550 was workout from the seized documents found at the assessee's residence. The seized documents are annexed to the assessment order. The details in the seized documents include name and addresses of the persons/concerns who had sought mining lease, the site of the quarry, survey number of the land and denomination of currency. The assessee cannot say that the documents do not pertain to him as he is the Managing Director of TAMIN, a State Government undertaking which is engaged in mining and export of granites. The assessee has not offered any explanation in respect of the seized documents. He stated that the denominations mentioned are from the Granite Association. But no details were filed. Hence, the Assessing Officer made enquiries with the granite association. The assessee did not ask for the opinion of the hand-writing expert. He has only questioned the Assessing Officer's action and sought for the grounds in which the opinion of the hand-writing expert was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;since the addition to total income itself is not based on the statement of various parties mentioned above but on the basis of the document seized and adequate opportunities have already been granted to the assessee, in the facts and circumstances of the case, assessee is not entitled to cross-examination of the few parties contracted". These dumb papers do not lead any evidence, regarding the fact of collection of any money by the assessee. He also does not rely on the statements of the lessors. In para 3.59, the Assessing Officer again states "The one and only inference possible is that assessee because of his position, collected money from the applicants for grant of licences..... applicant to got the licence". Since the Assessing Officer resorted to inferences without any basis or facts or proof of evidence, the assessment made under the provisions of Chapter XIV-B is not tenable. Assessee in his rejoinder states that he reiterates the submissions from page Nos. 21 to 87 of assessee's written submissions Vol. I. 63. We heard the rival submissions and have gone through the assessment order, the paper books filed by both sides and the decisions cited. It was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any corroborative evidence, it is difficult to hold that it is actually receipt. Now, we will discuss the third item which is said to be prepared by the staff who prepare papers for consideration of the High Level Committee. In this also there are coded figures with decimals. The hand-writing there, according to the Revenue, is of the assessee. Again in these papers referred to as item (b) the coded numbers are in the last column in the list prepared. According to the Revenue, these numbers cannot be treated as inconsequential or meaningless numbers. This has to be weighed against the background of the case. There is no case for the Revenue that Revenue found any duplication of applications. The Assessing Officer in the assessment order (pages 25 to 35) gives illustrations and the summary of the statements recorded from some of the applicants whose slips were seized from the assessee. The first summary given at page 25 is of M/s. East India Granite Ltd., Hyderabad on the basis of the seized document No. 31 of NGN/B&D/S-12, S-18/6, S-11/18. In his statement he states that he is Managing Director of M/s. East India Granite Ltd., a company doing quarrying. He came to know that they h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the statement was recorded was Shri Sanjay Kumar Chief Co-ordinator of Deccan Granites Ltd., Hyderabad, who was examined on 24-1-1996. In his statement, the deponent states that he came to know that unless some payment is made to Shri Dyaneswaran (assessee), nothing will work and no licence will be granted. He learned that one Shri Anbalagan was acting as broker and agent of Shri Dyaneswaran who used to clear the applications. The slips said to be seized from the assessee's residence were in the hand-writing of Shri Sanjay Kumar whereas the application was in the name of another employee Shri Arjun Rao. The person who was acquainted with Shri Anbalagan states that he does not know the address or whereabout of Anbalagan. We have gone through the statement said to have been recorded from Sanjay Kumar regarding the handing over of money by him. In addition to Shri Sanjay Kumar's statement, we find at page 2 of the statement that the total of the amounts mentioned comes to more than ₹ 9 lakhs. In the assessment order at page 27 it is mentioned "On enquiry with the assessee it is learnt that the assessee withdrew ₹ 8,00,000 from State Bank of Hyderabad on 24-2-1995 ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment order). He states that he withdrew the money from Punjab National Bank, Rajaji Salai, Madras and it was sent through Shri K.P. Arumugam who visited TAMIN office and personally handed over the money to Shri Dyneswaran, and immediately thereafter in May 1993 the licence was granted. Again for the next application also he sent the money through Shri Arumugam and for the quarry at Agaiyur village near Salem, he withdrew ₹ 3 lakhs from Punjab National Bank, Rajaji Salai, Madras and sent it through one Shri K.C. Damodaran and subsequently quarry licence was received. It is to be seen that this statement was also not put to the assessee. In addition to this, the deponent himself had not made the payment. It is said to be made through a third person. His confirmation has also not been brought on record. We do not see any reason how such a statement could nail the assessee. 69. The next person from whom the statement is recorded is Shri S. Murugan, M/s. Deepa Traders, Madras, on the basis of the seized material reference No. N. GN/B&D/S-14/34A, S-15/4, S-18/49. We could not locate his statement in the paper book fled by the Revenue. Hence, we are unable to deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot known. The assessee was also not given an opportunity to meet this hearsay statement. This statement has no relevance, and it cannot be used against the assessee. 73. At page 30 of the assessment order, another statement is recorded from one Smt. K. Mallika, partner of M/s. Atlas Granites & M/s. Omega Granites. She states that whatever her husband says is binding on her. At the next page is the statement of Shri Mani, the husband of Smt. Mallika. It is seen from his statement that the revenue authorities showed him some seized papers of M/s. Atlas Granites in which the assessee's wife is a partner and he further states that ₹ 4 lakhs was paid to the assessee in his office by his co-brother Shri K. Subramanian. It was paid before two months of the receipt of the licence. This amount was from his business funds, and subsequently this was adjusted in the account by doing some manipulations. We have to say that the payment said to be made was not by one of these deponents, either Smt. Mallika or her company. This statement was not given to the assessee for confirmation of the payment. In addition to this, we have to state that this statement can also treated only as hearsay. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But, with regard to the confirmation from Shri Ratinam, there is nothing on record. It is also the same case with many of the persons who are said to have made payment for quarry licence, the payment was not made by them directly nor the statements of the persons who are said to have made the payments are brought on record. All these show that the text case done by the Assessing Officer to discredit the assessee's statement does not prove beyond reasonable doubt that the assessee had received the payments as claimed. 77. In addition, we have to further state that the statement said to have been taken from the President of Granite Association, Shri Badrinarayan is not brought on record. Neither it is placed before us. We are afraid, if all these statements are taken to the logical conclusions, they can go against the Revenue. It is true, the assessee states that there had been collections from Granite Association whereas according to President of the Granite Association, none of its Members had made any payments which are contradictory to each other. In addition, the statement said to have been taken from the President of the Granite Association has not been placed before us. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is connection, we may usefully refer to the decision of the Tribunal (Third Member) in IT (S&S)/Coch/97 in the case of M/s. T.O. Abraham & Co., Tiruvalla dated 25-4-2003 which goes to the root of the matter. In the above decision, the Tribunal held that such an order is passed without the approval of the Commissioner. It was always the case of the assessee that it was not humanly possible for anyone to approve the order running into 156 pages with annexures of about 120 pages within two days. Because the assessment order was served on the assessee on 31-1-1997. In the above Third Member case it was held that an order passed without the approval of the Commissioner is null and void. However, we are not taking the extreme view following the decision of the Tribunal cited above for the reason that only one of the statements was not given to assessee will not be sufficient to hold that the entire proceeding is vitiated. We have to hold that the aforesaid statement of Shri Chinna Gounder cannot be taken cognizance of. We have to hold that inclusion of this statement and using it against the assessee, which was recorded after submission of the draft order for approval of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e District Collector who in turn forwarded it to the concerned Tahasildar for inspection and to report to the Director of Mining & Geology for recommendation for issuance of licence. It is again to be seen that the assessee was never afforded an opportunity to confront the deponent. Revenue says that all the papers were subsequently given to the assessee. It is also the case of the Revenue that it is not relying on these statements. If he is not relying on these statements, then there is no meaning in taking statements and putting them on record. Further, in the absence of any cross-examination of the deponents by the assessee, none of these statements could be used against the assessee. Therefore, we are of the view that the Revenue's case that the seized materials speak voluminously for the collection of illegal receipt by the assessee is not established. There is no corroborative evidence except the slips of papers seized. It is true, the assessee is neither denying or admitting receipt of payments in connection with the issuance of licence for quarrying. It is established by the Revenue that some of the papers are prepared in the office of High Level Committee for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licants or by the Staff preparing the papers for High Level Committee. Merely because these papers were found in the assessee's residence, the entire papers cannot be attributed to the assessee without getting elucidated from the parties concerned. In this view of the matter also, we are afraid, the additions made in the hands of the assessee cannot be upheld. 83. Now coming to the other contentions of the assessee's representative with regard to the handwriting said to be found on the papers in the handwriting of the assessee, we hold that the correct legal procedure has not been followed. The Expert's opinion or information of third person can be entertained and treated as the basis for making the decision under section 45 of the Evidence Act, 1972. Section 45 reads as follows : "When the Court has to form an opinion upon point of foreign law, or of science or art, or as to identity of handwriting 'or finger impressions', the opinions upon that point of persons specially skilled in such foreign law, science or art (or in questions as to identify of handwriting) (or finger impressions) are relevant facts. Such persons are called experts." Section 73 of the Evidence Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned are in the assessee's handwriting is not sufficient in the absence of any corroborative evidence. It is not clear how the expert's opinion was obtained and which was the uncontroverted handwriting that was forwarded for comparison along with the disputed handwriting. Before sending these docu- ments, assessee was never made aware that this was being sent for expert's opinion. In the absence of the correct procedure followed or at least in the absence of placing any opinion of the expert on record, we are of the view that the mere statement by the Assessing Officer that the expert has opined that the handwritings are of the assessee cannot be taken judicial note of. On both the counts, Revenue's stand fails. 84. Now another point which we have to consider is what is the role of the assessee in granting the licence. If the assessee was the sole person, then perhaps it would have been much easier to believe that the payment to the assessee was sufficient to get a licence. Assessee is only a Member of High Level Committee. Nothing about the High Level Committee has been discussed, except that the High Level Committee makes recommendation for issuance of licence. High Level C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the assessee. 89. Before dealing with the decisions relied on by both sides, we have to deal with the preliminary statements recorded by the Assessing Officer. In the preliminary statements recorded on 19-1-1996 under section 132(4), assessee gives explanations with regard to his and his family members' investments and the final statements commence from page .......... onwards including various other matters. One question put to the assessee at page .......... is reproduced below : Q. No. 75 : It has been submitted by various parties who have taken granite quarries on lease that Government received sums varying from ₹ 7 to 15 lakhs per acre. What do you want to say? Ans. TAMIN is a Government owned company by Tamil Nadu. It is a blue chip company of the Government earning foreign exchange upto 50 crores of rupees in dollars, showing a profit of 40%. TAMIN as shortly called is not a statutory body to sanction leases to Minor Minerals, under which granite comes. Of late granite trade has become a political issue and unnecessary mud slinging is made against this Corpn. which has no comparison with any of the Public Sector Undertaking in whole of India in its growt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a clear answer that how TAMIN after coming into the picture, has grown. He states that when he took over the Corporation, its turnover was about 9 crores whereas at the relevant point of time, it was more than 50 crores and he also speaks of the allegation connected with politics. Though we are not concerned with the above allegations and political intrigue, still it is always the case of the assessee that he needs to be treated like any other income-tax assessee. Assessee speaks his mind that he is being treated differently for some reason which a Government officer cannot say openly. While dealing with the legal issues, we have rejected this contention of the assessee. But still this question and answer cannot be treated as completely irrelevant and our eyes cannot be closed to the fact that there is something more than what the eye can see. With the above observation, we restrain ourself. In the light of the above discussion, we delete the addition of ₹ 38,95,74,550. 90. Before parting with, we also bring on record the following points on this issue. It is to be seen that the assessee is only a Member of High Level Committee. The Committee consists of three members. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not specifically given a finding that the agricultural lands are taken on lease either by the assessee or by the members of assessee's family. Therefore, even the rejection of the assessee's claim of agricultural income does not go to show that the assessee had made investments with illgotten money. 91. Coming to the decisions relied on by the assessee, we have recorded hereinabove Mr. Ravi's arguments distinguishing the decisions relied on by the revenue. In fact, Mr. Ravi has rightly pointed out that the decisions relied on by the revenue are not to the point. The first decision relied on by the revenue in M.K. Thomas' case (supra). This was a case dealing with sales-tax. The assessee did not file the return. On inspection, Intelligent Wing seized some records and statements were recorded. It was on the basis of a statement recorded from one employee that the re-assessment notice was issued by the Sales-tax Department. It was the case of the assessee that before issuing such a notice, he should have been heard and an opportunity should have been given to cross-examine the said employee. The Court said so. The above decision is distinguishable on facts from the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded perhaps after the draft order was submitted to the Commissioner for approval. 94. In Ratanlal Surekha's case (supra) the Calcutta High Court held that levying penalty without giving the assessee an opportunity to cross-examine the partner who had confessed that loan was not genuine, was improper. 95A. In the light of the above discussion, we hold that the additions made by the Assessing Officer cannot be sustained not only factually but also legally. 95. The next effective ground urged by the assessee is directed against the order of the Assessing Officer in making an addition of ₹ 15,58,900 and ₹ 1,48,65,650 totalling ₹ 1,64,24,550 (original ground No. 4(a) to 4(e)). It is the case of the assessee that the Assessing Officer failed to note that the ownership of these amounts has been accepted by other persons and the Assessing Officer failed to establish the ownership of the assessee. This issue has been dealt with by the Assessing Officer vide paras 4.1 to 4.76 at pages 47 to 82 of the assessment order. 96. The facts briefly are that during the search and seizure action, cash was found in the assessee's bed room to the extent of ₹ 15,58,900, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Basket Ball Association (3)Kalaiselvan of Trichi Basket Ball Association (4)Viswanathan of Karur Basket Ball Association (5)Shanmugasundaram of Periyar Dt. Basket Ball Association It was stated that they had given loans from Association Funds or from private individuals. It was further stated that nobody other than the assessee was keeping the funds belonging to TNBA. On further questioning, it was stated that Madurai Association, had paid ₹ 3 to 5 lakhs, Trichy and Karur Associations ₹ 5 to 10 lakhs and Periyar and salem Associations ₹ 5 to 10 lakhs etc. However, the assessee could not produce any records in respect of these collections. It was asked specifically how in the absence of records, he is going to repay the amounts. The answer was Basket Ball Association is a close-knit family and in a week's time the orally conveyed details could be confirmed and repaid without any difficulty once the Government released the funds. Assessee was not having any answer to the question why the money was not kept in the account as the rules of the Association stipulates that the cash should be deposited in the bank immediately. The Assessing Officer further states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 100 each of City Union Bank dated 2-1-1996, 2 bundles of ₹ 100 each of Bank of Baroda dated 4-1-1996, 1 bundle of ₹ 100 of Bank of Madurai dated 5-1-1996. The assessee could not answer the question why the slips showing the dates even after the ending of games on the bundle of currencies were available and how such bundles could reach his office even after the Games were over. However, the assessee that that he would be able to give the details after a week or so. The cash found in the assessee's office was ₹ 1,48,65,650, records the Assessing Officer at para 4.11 of his order. Since the mere statement that it belonged to TNBA was not sufficient, assessee was asked to produce the persons concerned vide letter dated 17-10-1996 which was served on the assessee on 19-10-1996. It was further stated that any claim regarding the availability of funds belonging to TNBA should be strictly proved with documentary and oral evidence. It was also stated that the claim should be proved by producing the persons concerned before the officer for examination. The requirement was to be complied with by 24-10-1996. To this, the assessee replied that CBI had seized his incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Tamilnadu, because both of us would be sharing the third party's wealth in the name of the Income-tax Act. 98. The Assessing Officer records from para 4.19 onwards the constitution of the TNBA and its conduct rules. It is a registered society and governed by registered constitution. The objectives are to promote and control the game of basket ball. The affairs of the association was to be carried out by the Executive Committee under the guidance of General Body. The Executive Committee as per clause VI consists of elected President, four Vice-Presidents, Secretary, Jt. Secretary and Treasurer and six members. The President shall have general control over the affairs of the association and he has to preside over all meetings. The Jt. Secretary and Treasurer is responsible for the finance of the association and the cheques were to be signed by the President and Treasurer jointly. It had account with State Bank of India, Indian Overseas Bank, Kilpauk Branch and City Union Bank. The President (assessee) was elected till March 1991. The Assessing Officer records that being a member of the All India Service, the assessee should have intimated the fact of his election as the President ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, without depositing the same in the bank accounts and to keep it for about 2 months and the reaction of the person was that it was highly improper. Then for the next question whether anyone would pay ₹ 25 to 36 lakhs without even having a receipt from TNBA, the answer was again a mute agreement. Hence, the Assessing Officer came to the conclusion that the Association President's statement is only to help the assessee to explain the money found at his residence or office. He further found that for the period from 13-11-1995 to 19-1-1996 the bank account was operated several times but the highest amount transferred was ₹ 29,500 which speaks for the account's association. The Assessing Officer held that as the cash was found in the assessee's custody the presumption under section 132(4A) is that it belonged to the assessee, and it is the duty of the assessee to prove the contrary. In the absence of entries in the books of account or in the absence of other evidence, the mere claim does not absolve the assessee from his responsibility, the Assessing Officer held. Though the assessee was asked to prove the sources, the assessee had done nothing in this direction. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e address. Shri Gandhi was an employee of Gandhi Gram Rural Institute and later on he left this job and started business in granite in the name and style of Ashhaa Exports of which he was the managing partner with 40 per cent share and the other partner was assessee's mother, Smt. Dharmambal with 60 per cent share. This firm commenced business in 1994-95 with a capital of ₹ 1 lakh entirely contributed by Dr. Dharmambal. This firm has business dealings with TAMIN. Mr. Gandhi stated that funds for SAF games were collected by Chairman, TNBA from basket ball lovers as interim arrangement. Then he gave nine names of the persons who are said to have advanced money to the Basket Ball Association. The Assessing Officer held that these names of the persons were given after much scheming and deliberation. Some of the persons were examined and the results of investigation are recorded at pages 61, 62, 64, 67, 70 and 72 of the assessment order. The Assessing Officer narrates the complete sequence of events relating to the work of air-conditioning of the stadium of basket ball association at pages 72 to 77. The Assessing Officer found that ₹ 1.25 crores was received on 13-12-1995. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Keeping the money in violation of the Rules of TNBA was contrary to the rules and it found place in the residence of a public servant. The assessee was prohibited from collecting funds for TNBA and keeping it in his custody by Government order. Assessee's failure to furnish the address or names of the persons who are said to have given money speaks for itself. He further found that TNBA constructed the Basket Ball stadium by collecting funds exceeding ₹ 1.5 crores during 1989 to 1994 and there were all the records maintained and it was done very methodically. This showed how difficult it was to collect money for such purposes, held the Assessing Officer. The President of TNBA was not even aware of the collection and the writ petition filed by Association, which speaks for itself. The claim that money was being collected for airconditioning the stadium was incorrect. Fearing Government's delay in releasing the money collection went on is also not correct. Government's authorisation to TAMIN for making the contribution of ₹ 1.25 crores came as early as 13-12-1995 and the assessee, being the Chairman of TAMIN could have easily transferred the money to TNBA. In fact on both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment of the assessee it is shown as on protective basis. Since the Assessing Officer has accepted that the income belonged to the assessee's son cannot be treated as income of the assessee again on substantive basis. Mr. Ravi submitted that since the money was found in the house of Shri Senthureswaran's residence and he had accepted the responsibility, and it has been regularised by issuance of notice, there is no question of treating it in the hands of the assessee on substantive basis and treating the same amount in the assessee's son's hands on protective basis. The tax has been accepted under KVSS declaration. Assessee's representative submitted that the Assessing Officer deals with the cash seized in paras 4.3 to 4.76 at page 82. However regarding the amount not belonging to TNBA, the Assessing Officer deals with it at two places, first at page 29 and again at page 79. Assessee's representative submitted that at page 49 the Assessing Officer only says that the assessee's reply is vague and unsatisfactory. But he has not given any reason as to why he arrived at this conclusion. At page 79 he only says that except ₹ 3.35 lakhs found at the residence belonging to Shri Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed to have advanced money to the extent of ₹ 50 lakhs have not been examined by the Assessing Officer. 103. It is to be noted that the assessee had discharged the primary onus of giving the identity of persons. Assessee is not supposed to discharge the onus of proving the source of sources. Seven persons who had been questioned, have admitted that they handed over the money to the assessee. The Assessing Officer only disbelieved it because they have no source. The Assessing Officer disbelieves the explanation because he says the TNBA has no proper source. However, relying on the decision of the Tribunal (Ahmedabad Bench) Shankar Khodabhai Bhoi v. Asstt. CIT [1996] 59 ITD 364 and the decision of the Madras High Court in the case of S. Hastimal v. CIT [1963] 49 ITR 273, it is contended that assessee should not be called upon to prove the source of source. Assessee's representative also relied on the decision of the Tribunal (Calcutta Bench) Balurghat Transport Co. Ltd. v. Asstt. CIT [1999] 63 TTJ (Cal.) 3021 wherein the Tribunal held while dealing with a case under Chapter XIV-B that once the assessee was able to establish that it had in fact, received moneys from another e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, these are all presumptions and not evidence. In this context, it is to be seen again that there is no material before the Assessing Officer to come to the conclusion that the money belongs to the assessee. The very fact that the notice under section 148 was issued and KVSS assessment made shows that the Assessing Officer cannot now claim that the money belongs to the assessee. 105. Assessee's representative submitted that in the initial stage of preliminary statement itself it was stated that the money belonging to TNBA was in assessee's possession. The explanation was given that this money had been collected from Basket-ball Association. In the preliminary statement itself the assessee has stated that there was about ₹ 1 crore in cash belonging to TNBA in the possession of the assessee. The actual amount found was ₹ 1.44 crores. Even though the assessee was not able to give the names of each and every person, assessee has explained the mobilisation money and has also given names of five persons. The Assessing Officer examined these persons behind the back of the assessee but nobody denied the collection of the money. When Shri Gandhi of TNBA gave the names and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral area is an unorganised activity. Further, the assessing officer had not questioned the deponent's brother to verify the veracity of the statements that he knew the existence of the money but not his family members. He very clearly stated that he had given advance of ₹ 10 lakhs. 110. Coming to the statement of Shri G. Parthasarathy of Salem, who is said to have given ₹ 5 lakhs, assessee's representative submitted that the Assessing Officer rejected this claim also for no valid reasons. The deponent had taken the money from his father for real estate business. The deponent was a broker and mediator for purchase and sale of properties. He handed over the money in cash when it was required for the activities of TNBA. The deponent was a former Vice-President of Salem Youth Congress and knew the assessee from the time the assessee was Addl. Collector at Salem and they used to meet often. One of the reasons for the rejection of the deponent's statement was that there was no receipt or pro-note executed. The absence of pro-note or receipt alone is not sufficient to deny the fact offered, submitted the assessee's representative. Another reason for disbelieving the deponent' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The only additional point which the Assessing Officer made is that in the record book produced by TNBA it was the name of the deponent and not that of the Trust in the transaction. But, still the fact remains that the deponent stated that the advance was by the Trust. TNBA recorded the name of the individual because it was the individual who handed over the money. The issue here is whether the funds were received or not. The source is the trust. The deponent is the Chairman and trustee of the trust. The reason for non-belief is also imaginary, assessee's representative submitted. Another reason given by the Assessing Officer is that it is unconceivable that a public charitable trust would give huge amounts of cash as interest free advances. This is only suspicion, assessee's representative submitted. 113. The next persons who are said to have given money are Shri N. Tamilshselvan and Shri K. Guruswamy. The money was arranged from one Shri A. Shanmuganathan. Though Shri Shanmugnanathan denied the arrangement made, subsequently he filed a confirmation acknowledging the advance. He further stated that he gave the earlier statement under duress against the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han. 116. Assessing Officer's narration of events has been refuted by Shri Ravi, the ld. representative of the assessee vide his written submissions contained at pages 156 and 157 of the written submissions (Vol. II). He submitted that the important events would show what the assessee claimed is correct. He also submitted that the chronology of the events would show that the collection was completed much before the sanction and disbursement of money from the Government. The time-lag between the date of sanction and date of disbursement is about 2 months. It was because TNBA was aware of this that they undertook collection of money earlier. In para 4.70 the Assessing Officer states that because money handed over in the house was carried to the office, the explanation given is not believable. Mr. Ravi submits that this is an opinion of the Assessing Officer and it is not on the basis of any evidence. The assessee did not want to keep so much cash in his house and that is why he kept ₹ 3.35 lakhs in his sons' residence. The next finding of the Assessing Officer given in paras 4.71 and 4.72 is that about ₹ 60 lakhs did not contain any bank slips, and of the balance, some o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bank, Nungambakkam, but the date is 11-1-1996 and not 12-1-1996. From the above, one fact is clear that the notes seized at home and office are not co-relating with the list drawn by the ADI. Therefore, it is not possible to identify and place from which seizure these notes bearing dates after 16-12-1995 were made. Except that, the notes having the dates 26-12-1995, 27-12-1995 (25-12-1995) amounting to ₹ 20,000 and the notes having the dates 2-1-1996, 4-1-1996 and 5-1-1996 amounting to ₹ 50,000 were seized from the office. It is the submission of the assessee that the bundles amounting to ₹ 50,000 relates to the advance made on 7-1-1996. The other notes with dates have been listed only in the seizure made at the son's house. It is therefore submitted that the finding given by the Assessing Officer that ₹ 5,10,000 was received after 16-12-1995 would prove the assessee's contention of advance to TNBA as false is not correct. In short, a lot of mistakes have been committed in preparing the dates on bundles and also the seizure made at the residence and the office has not been correctly co-related, which all shown that the Assessing Officer's claim is incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 had been received only after 16-12-1995. Having noticed from the Panchnama that a few bundles had been noted as dated after 16-12-1995, they struck upon this idea in order to try and disprove the assessee's statement that he had collected the moneys by 16-12-1995. 118. In short, the assessee's representative submitted that the additions made of ₹ 1,64,15,650 is without any basis. This amount belongs to TNBA. They have accepted it. Assessee has pointed out that on a war footing the money was collected from the well-wishers and enthusiasts who were eagre to conduct the SAF games at Dr. Jayalitha Stadium and the assessee was one of the members of the Executive Committee and he was also entrusted with the work of collection of funds. Assessee was also closely connected with TNBA as Chairman and founder member. It was under these circumstances that the assessee happened to collect the money. In view of the above, assessee's representative submitted that the addition made is without appreciation of all the facts, and for the elaborate written submissions made by the assessee, the addition is liable to be deleted. 119. Revenue's reply to the above is recorded in Revenue's pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 69A. (e)As there are number of investments in movables and immovables in the name of Shri A.D. Senthureswaran and Dr. Dharmambal, they were asked to explain the source of these investments. Sri Senthureswaran contended that the source of investment is from his grand mother, Dr. Dharmambal and also from agricultural income. When asked to produce the lease deeds of these agricultural lands for confirming leasing rights and yield, Mr. Senthureswaran was not in a position to explain. The Assessing Officer proved that Dr. Dharmambal herself did not have requisite funds for investment in her own name. In view of the aforesaid, the Assessing Officer correctly held that the investments/payments are from the unaccounted income of the assessee only." 120. In the rejoinder filed by the assessee dated 25-6-2003, the issue is briefly dealt with. It is the case of the assessee that Revenue cannot ignore the amount deposited in RBI in excess of what was seized and recorded in the Panchnama. It is true that the assessee was not present at the time of depositing the amount. The amount found at the residence was counted and ₹ 1,59,50,000 was seized. However, ADI subsequently wrote a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie duties cast upon him. The case of the assessee is that the assessee has established all the three ingredients. The identity of the party is TNBA and various individuals belonging to TNBA. Coming to the capacity of the parties, the case of the assessee is that the parties questioned had admitted advancing money and it is not for the assessee to prove the source of source i.e., capacity. If they had accepted, then there is no reason why the assessee should explain their sources. Further assessee's written submission shows that it is the case of the assessee that assessee had even to a certain extent explained the source of source and the genuineness of the transaction which the Revenue denies. For a part of the money seized from the residence amounting to ₹ 12,90,000 it is the case of the assessee that it belongs to the assessee. The identity cannot be disputed. Only the remaining ingredients i.e., capacity and genuineness of the transaction have to be established in which the assessee has failed. When the Revenue questioned, assessee's son Senthureswaran, denied any knowledge of the money and only subsequently he came forward and availed the benefit under KVSS declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d GIR Numbers of the creditor, the assessee has discharged the primary duty. Then it is for the Revenue to disprove it. In this case, it has to be noted that before rejecting the assessee's claim, the Revenue has not called upon either the assessee or TNBA to explain the position. In most of the cases, relied on by the assessee, it was cash credit. But in the instant case, the facts perhaps stand unique. The reason is that the assessee claims that Govt. of Tamilnadu had decided to conduct SAF Games at Dr. Jayalalitha Stadium. The Government agreed to release the money and a Committee was appointed for looking after things and for smooth running of the games. Assessee was the foundation President of TNBA. Subsequently, a new President was elected but the assessee was continuing as the Chairman and patron of TNBA. He was entrusted with the work of fund collection. It is common knowledge that when games are sponsored and conducted by the Government, the well-wishers and enthusiasts will donate money. We have seen hereinabove that in one case the person who is said to have given money was a Congress party worker. It is true, he may not be having money, but such persons are capable of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out attempting any step, the non-acceptance of the assessee's claim cannot be justified. 122. Adverting to the assessee's claim that some manipulations have been done regarding the excess money found etc., we find no merit in this for the reason that the disputed amount is ₹ 5 lakhs. At the most it can be said that this sum of ₹ 5 lakhs can be excluded while considering the issue. Even if this amount is not excluded for the reasons claimed by the assessee, then the Assessing Officer's stand that assessee had collected money even after the completion of the games, and that shows that money was collected not for conducting games but for the assessee's purposes, cannot be accepted. Assessee's representative has fairly well-established that some of the money collected after the completion of the games may be this money. But since some of the amounts have not been recorded in the Panchnama which is the primary document of the search, it cannot be disputed by the letter of ADI that some amount has been found as excess. As we have noted above, even after this amount is excluded for obvious reasons from the seized money because it is not recorded in the Panchanama, we are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is a Registered Society under section 12A of the Act (AOP). Vide page 3 of the assessment order, the assessee has been denied the benefit of exemption and an amount of ₹ 152 lakhs has been brought to tax. Assessment has been completed under section 144 read with section 143(3). Penalty has also been levied which means the Revenue has treated this assessment as substantive and the tax has been accepted. 125. Another contention raised by the Revenue is that even after the completion of the games, no attempts were made to return the money. There was also no attempt made to put the money in the accounts of TNBA. All these according to the Revenue indicate that the money was not of TNBA but of the assessee. The sequence of events has been narrated by the assessee at pages 156 and 157 of the assessee's paper book (Vol. II). A perusal of the above will make it clear that the first sanction of the amount by the Government to TNBA was on 6-1-1996. This amount was released on 6-2-1996. TNBA approved the disbursement of ₹ 125 lakhs on 13-12-1996. The search and seizure action took-place in the office premises as well as in the residence of the assessee on 19-1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which, loans have been taken from Basketball enthusiasts, friends, relatives and basketball clubs, both individuals and direct, amounting to the needed figure of ₹ 150 lakhs. In my preliminary statement recorded at my residence, this morning, I have stated about this and about ₹ 3 to 4 lakhs of this money was kept in my M-26, Annanagar (East) Madras - 102. The rest of the money amounting approximately to a crore was kept in two almirahs in the office. The balance money was spent over various contractors. About ₹ 8 lakhs was issued as an advance for air-conditioning from TAMIN funds subsequent to this collection based on the G.O.'s issued." Then the assessee was questioned about the constitution of Basket-ball Association. A question was put again as to who constructed Dr. Jayalalitha Stadium at Kilpauck. The answer was that it was constructed by the TamilNadu Basket Ball Association for which there was a separate Advisory Committee having Mr. C. Subramaniam former Union Minister as patron. The stadium was constructed within three or four years at a cost of ₹ 1.75 crores. Then questions were asked about the air-conditioning, face lifting programme, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ₹ 1,52,00,000 has been raised as loans to meet the work given in the G.O. referred to above in Dr. J. Jayalalitha Stadium before the SAF Games for air-conditioning the same. Since these loans have been collected at a very short notice, owing to the fact that Government would not be in a position to release the funds, we had to very hurriedly raise the loans in which normal procedure could not be followed including issue of receipts. I have mentioned in the statement above the probable sources from whom the loans were raised, citing few names and places. Again, it is the urgency and the immediate task waiting at the door steps above that normal procedure could not be followed. SAF Games 1995 was practically over on 29-12-1995 by which time, we could finish the designed championships at Dr. J. Jayalalitha Stadium completing the face lifting work and partially managing accounting (sic) in the playing arena inspite of 10 lakhs neon lamp were used. Since the moneys were not released from the Govt. and pending work of accounting was there, the normal procedure could not be followed and moneys were kept without disbursement. The usual banking procedure could not have been followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. The purpose for which these huge sums were said to have been raised on a war footing namely SAF Games 1995 is also over on 27-12-1995. Normal procedure of banking has not been followed though the association has a bank a/c. From the explanation given by you, these sums do not appear to have been kept for the purposes of the Basket Ball Association. Your statement recording the loans also do not appear to be true in the absence of materials normally maintained by any person. The inevitable inference is that the cash found at ₹ 1,44,00,000 belongs to you and none else? What have you to say ? 127. In short, the facts given above will show that there is no evidence to the effect that the money that was recovered from the assessee's office was assessee's personal asset. This was the preliminary statement. Taking the totality of the facts and circumstances, we have no hesitation in deleting the entire addition treated as assessee's ill-gotten income that was seized from the assessee's office premises. Coming to the cash seized from the residence, though the assessee has denied that it is not his residence (may not be legally) but for all practical purposes, we have held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to recovery unless it is finally upheld. It is further stated "I have already brought to your notice the risk being taken by you (which is obvious). To reiterate if the Department's stand is upheld in appeal, the amounts paid by you under the KVSS cannot be refunded". With the above observation, Shri Senthureswaran's declaration has been accepted under KVSS. It is seen from the letter dated 16-12-1998 of Shri Senthureswaran that his fixed deposits have been encashed and adjusted against the demand protectively made against him. This has not been specifically denied by the Revenue. Even before the assessment made substantively in the hands of the assessee becoming final, the offer made by the assessee's son in whose name the protective assessment has been made, is accepted. It is further stated that the amount will not be refunded. Virtually, it seems, Revenue has, in spite of the above reply, treated the assessment as substantive. There is a further observation made by the Commissioner in his letter dated 25-1-1999 to the effect that "Having said this, I am enclosing Form 2A. You are, however, cautioned that this Form 2A is without prejudice to our findings in Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees and also furniture purchased for a consideration of ₹ 4.75 lakhs from P.V. Pillai & Co. This list does not include cash, jewellery, bank balance, movable and immovable assets found in the name of D.N. Trust etc. In para 5.2 the Assessing Officer records that the entire investment found in the name of Dr. Dharmambal was tried to be explained as agricultural receipt and professional income (i.e., income from medical practice) and ₹ 51 lakhs received from her husband. A copy of an affidavit executed by late Dr. Dharmambal explaining the source of the funds was filed by the assessee somewhere in Oct. 1996. The genuineness of this affidavit was doubted. Earnings from profession, agricultural income and receipt of ₹ 51 lakhs from her husband, the Assessing Officer records, have not been proved. However, the department proceeded further to collect whatever available in the form of substantial evidence which shows that whatever claims that assessee made were not genuine. The return of Dr. Dharmambal was filed only on 2-1-1997, assessee being the legal representative, as a ploy to establish her source of investment. The affidavit and its genuineness and the claim of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of search and subsequently on 24 and 25-6-1996. He stated that the property at M-26 Anna Nagar was in his and his brother's name. He also claimed some agricultural lands at Arasangudi, the extent of which was not known to him. He was not aware of the payments made towards purchasing M-26, Anna Nagar property, the name of the seller, etc. which he claimed was all known to his father. Even the extent of share in the investments was not known to him. His fixed deposit of ₹ 2,10,000 was with Indian Bank, Egmore and the presents received at the time of wedding/reception in the form of cash was to the extent of ₹ 9 to 10 lakhs and about the jewellery only his knew, stated Shri Senthureswaran. He further admitted that nobody from his family spent anything for his Singapore trip. Regarding improvements to the house at M-26, at Anna Nagar, he said, it was only known to his father. This was his preliminary statement. When questioned on 24-12-1996 Shri Senthureswaran gave more details. He gave list of assets standing in his name. The main source of funds was his grand-mother, Dr. Dharmambal and his agricultural operations from the land leased by him right from 1990. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the bank, it was stated that the lessors would not have any bank account. At least, he held, it is not true in the case of Shri Senthureswaran who had bank account. He held that Shri Senthureswaran who claims receipt of huge amount of money was totally ignorant of any lease deeds. How it could happen if his claim is true. When asked for contemporaneous evidence/records, Shri Senthureswaran stated, he would get from the lessors, but the fact is that the lessors were more ignorant of any of these activities. Shri Senthureswaran promised to produce the lessors, but it was not complied with. 132. The Assessing Officer vide para 5.11 records that he questioned two persons, Sri Suresh and Sri Sasidharan, who are supposed to have leased the agricultural lands to Senthureswaran. Shri Suresh admitted that he received advance of ₹ 6 lakhs, but finally he admitted that as per the lease agreement he received only ₹ 2.5 lakhs. This lacuna was tried to overcome the difficulty in explaining the amount of ₹ 3.5 lakhs given by way of advance to his cousin Sri Sasidharan from whom he had obtained this amount of ₹ 3.5 lakhs as a loan free of interest. He also stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the fixed deposits, except his salary income. 136. Coming to the claim of gifts received by Shri Senthureswaran at the time of his marriage and reception, while recording his statement on 24/26-12-1996, Shri Senthureswaran promised to furnish the name and address of the persons who had given such gifts on or before 30-12-1996. The Assessing Officer held that the cash gifts claimed of ₹ 5 to 9 lakhs at the time of marriage of the son of an officer belonging to the Indian Administrative Service is outrageous and such claims are too preposterous to be true. To accept such claims, there should be clinching evidence, held the Assessing Officer. Since there was no evidence at all, not to speak of anything clinching, he rejected the claim totally. Even if the assessee's son received any gift as per the Govt. norms, the assessee has to report to the Government as per the conduct rules of All India Services. It has not been reported. As per the rules of India Services, assessee filed his statement of immovable properties on 31-3-91. He did not file any such statements upto 8-11-1996 for the subsequent period, hence, the Assessing Officer held that all these claims of agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 4 lakhs and also her own purchase of 1500 sovereigns of gold, about 200 carats of diamonds and about 25 kgs. of silver. She further explains the financing of her grand-children providing ₹ 25 and 23 lakhs and also ₹ 5 lakhs to her son (assessee) and another gift of ₹ 10.9 lakhs to her second grand-son for purchase of a house. The affidavit also states that Dr. Dharmambal had founded a trust under the name and style of "Dr. Dharmambal Namasivayam Trust" and channelised funds/donations received by her under section 12A of the Income-tax Act. Then she explains further that she was a partner in M/s. Aahhaa Exports along with Mr. Gandhi and then she also talks of her proprietrix concern under the name and style of "Shilpi Grih Constructions" and another investment of ₹ 48 lakhs with M/s. Sri Bala & Co. towards real estate projects another investment of ₹ 7 lakhs in M/s. Pluto Granites, purchase of a Maruti Esteem Car for ₹ 5.28 lakhs from one Mrs. Shanti Devi Surana and a gift given to her grand-son (Mr. Arivazhagan). There is also mention in the affidavit of the advancing of ₹ 13 lakhs (Rs. 6.5 lakhs to Dr. Marthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of absolute non-co-operation of the assessee to establish the genuineness of the affidavit and its contents, it was felt necessary to enquire into some of the aspects contained in the affidavit and accordingly the Notary Public, Shri K. Chandran was contacted. In his statement, he stated that he signed it somewhere in the month of October 1996 and it was ante-dated. This was done on the trust he was having on the Auditor and the advocate who introduced the person concerned. All these facts have been detailed hereinabove in para. 143. The Assessing Officer vide para 6.5 further records that the stamp vendor Smt. S. Parvatham from whom the stamp paper of the Affidavit was purchased, was summoned and recorded her statement. The register of stamps maintained by her was obtained from the Customs Authorities who had impounded it in some other connection. It was seen that the stamp paper was sold to one Smt. S. Lakshmi way back in Jan. 1996. The Assessing Officer held that this speaks volumes regarding the genuineness of the affidavit. 144. A statement was also recorded from Shri P.K. Joseph, C.A., who attested the copies in his office. It was claimed that the original was brought to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce the original affidavit and thereby he failed to let any evidence regarding the contents and genuineness of the affidavit. He held that it was for the assessee to prove the genuineness of the document. He had not produced any books of account and bank pass-book to prove his mother's income from private practice. He held that this was so only after the search and that too through the legal representative who is the assessee himself. Filing the return of his mother to prove her private practice and income after the retirement is a futile exercise to supplement the sources of assessee's undisclosed income. Notwithstanding the above, enquiries were conducted with regard receipt of ₹ 51 lakhs, around 400 sovereigns and 25 kgs. of silver alleged to have been received by the assessee's mother her husband. Assessee's mother was the first wife of Shri Namasivayam and his second wife was Smt. Ariappu and a statement was recorded from Smt. Ariappu with regard to the financial transactions of her late husband. She did not know of the financial transactions of her husband, but she confirmed that no silver ware or gold jewellery was given to Dr. Dharmambal after the death of her husba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural lands in the name of Dr. Dharmambal, but the lease agreements etc. were executed in 1996 and they were signed by her son i.e. the assessee himself. In fact, he records that all the signatures of assessee's mother after 1991 are doubtful. If the assessee wants to prove the genuineness of the affidavit, it was the duty of the assessee to bring evidence and the assessee has chosen to do so. Aggrieved by the above order, assessee is in appeal before the Tribunal. 147. It is the preliminary objection of the assessee with regard to the additions that the assets were found standing in the names of family members and others and as such additions cannot be made in the hands of the assessee either under section 69 or 69C. Before invoking section 69, the Assessing Officer must show that these investments represented the assessee's undisclosed income. As per section 158BB, undisclosed income would be aggregate of the total income computed on the basis of the evidence found as a result of search and such other materials or information as are available with the Assessing Officer. Therefore, sine-qua-non for the inclusion of any income as undisclosed income is evidence found as a result o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice room in TAMIN". 149. Assessee's representative, Mr. Ravi submitted that the Assessing Officer was wrong in invoking sections 69 and 69C. Under these sections, the Assessing Officer can make the additions in the hands of an individual on the basis of evidence but it does not permit addition on the basis of presumptions as to fact of investments being made by the assessee or expenditure having been incurred. The wording used in section 69 is "the assessee has made investments". This is very crucial. There should be clinching evidence to show that investments had been made by the assessee. In the instant case of the assessee investments are made by other persons. But there is only suspicion that the assessee's ill-gotten money has been used for these investments as made out by the Assessing Officer to make the substantial additions in the hands of the assessee. Section 69, Mr. Ravi submitted, does not give the Assessing Officer any power to assess a third party in respect of investments made by them for which they do not have sufficient explanation. The section only gives a discretion to the Assessing Officer either to assess them or not to assess them. For the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer which went against the assessee. The first question to which he replied positively was whether the summons was signed by the Notary. The other two questions which the Assessing Officer did not want to be recorded were (a) whether the Notary was maintaining a diary to which he replied positively and (b) whether the statements made before the Income-tax Officer were made under threat, to which also he replied positively. Assessee's representative further submitted that though the Notary stated that the affidavit was not signed by Dr. Dharmambal before him, he stated that it was signed after being assured that Dr. Dharmambal was sitting in the car. Such a practice is well-known, submitted the assessee's representative. 152. Coming to the statement of the stamp vendor Smt. S. Parvatham, she was examined by the Assessing Officer and she had stated that she sold the stamp to one Smt. S. Lakshmi. It is to be seen that normally stamp vendors do not make entries simultaneously in the register and do so only afterwards. In this case, therefore there is the possibility that she may have entered any name that took her fancy. Further, she was examined behind the back of the assessee and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement. 157. Regarding the reliance placed by the Assessing Officer on the statement recorded from Smt. Ariyappu (second wife of the assessee's father and also the statement of Shri Muthuvel, son of Smt. Ariappu with regard to the claim of receipt of ₹ 51 lakhs from the assessee's father, of 400 sovereigns and 25 kgs. of silverwares, the assessee's representative submitted, their statements cannot be used against the assessee as they are on enemical terms with the assessee's branch of family. Further, these statements were not taken in the presence of the assessee or any of his family members. No opportunity for cross-examination was extended. Their statements are only hearsay. In her statement, Smt. Ariyappu does not deny receipt of ₹ 51 lakhs by Dr. Dharmambal. She only says, no such money was left with her. Shri Muthuvel has neither denied nor asserted anything but he only asserted the statement of his mother. If the Assessing Officer is not able to believe the affidavit or the statements, then he has to proceed against Dr. Dharmambal and not against the assessee in any case, submitted the assessee's representative. Whatever be the weakness of the explanation for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS rules. Further, there is no claim made in the assessment year 1991-92 and there were investments during that period which have not been considered in the block assessment. 164. Assessee's representative submitted that the gifts received at the time of Shri Senthureswaran's marriage and reception amounted to ₹ 9-10 lakhs. Merely because he could not give the names and addresses of the persons who attended the marriage function and whose numbers were about 3000, how could the gifts be denied, submitted the assessee's representative. In short, the assessee's representative submitted that there was no basis for making this addition in the hands of the assessee. 165. In reply the above, the Revenue made the following written submissions: "The Assessing Officer had given enough opportunities to the assessee's family members to prove that these investments in movable/immovable properties are from their own sources of funds. The assessee's mother's returns of income for the assessment years 1986-87 to 1994-95 were signed by the assessee as her legal representative on 2-1-1997 i.e., after the date of search. The filing of the returns of income was only an afterthought and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining to other persons are found, such papers are to be handed over to the Assessing Officer who is assessing the other persons and notices are to be issued under section 158BD. When the assessments are completed under section 143(3), it means that the Assessing Officer is conducting regular assessment in the case of other persons. If the assessment is treated as regular assessment, there is no scope for treating the assessment as protective and substantive in the case of other individuals in whose case the search took place. 167. We heard the rival submissions and have gone through the order of the Assessing Officer as well as the decisions cited. Coming to the affidavit of Dr. Dharmambal, looking to the facts and circumstances of the case, we are of the view that it is difficult to accept the assessee's contention. First of all, the original was not produced either before the assessing or before the Tribunal. Secondly, the Assessing Officer noticed that there were circumstances which created suspicion about the existence of the affidavit. It is true, no opportunity was extended to the assessee to cross-examine either Dr. Dharmambal or assessee's step brother or the stamp vendo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst this, it has been assessed as a regular assessment. In the light of the above fact, we are of the view that the addition made in the hands of the assessee on substantive basis with reference to Dr. Dharmambal cannot be confirmed. Under section 158BB(1), the undisclosed income of the block period shall be the aggregate of the total income computed on the basis of the evidence found as a result of search or requisition or other document found as a result of materials gathered or information received. 168A. Section 158BD tells what constitutes the undisclosed income of another person. It states "Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect of whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against such other person and the provisions of this Chapter shall apply accordingly. 168B. The 1st ingredient is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment recorded at the time of the search, assessee's son, answering question No. 7, stated that he received gifts of about ₹ 9-10 laksh in cash during the marriage reception; about the gold items received, the details are known to his mother only. There is no reason why this preliminary statement cannot be accepted. Merely because the assessee who is an IAS Officer has not declared and informed the Government of the receipts, it does not mean what the assessee's son stated is not correct. If the assessee has violated any rules by non-declaration, the consequences cannot be under Income-tax Act. Therefore, we have no reason to disbelieve this statement. 170. Coming to the honeymoon trip of assessee's son to Singapore, it is also stated while answering question No. 18 that the expenses might have been met either by the uncle in Singapore or by his father-in-law. He further stated that he had stayed with his uncle's relatives in Singapore. He also stated that most of the purchases were made by them. But it is seen in the assessment order that the ticket was procured by the D.N. Trust. In his statement recorded on 24-12-1996 Shri Senthureswaran says that he was having income, pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. If the amount is also included in the regular assessment and KVSS declaration had been accepted and the tax also paid consequentially, this amount also cannot be included in assessee's hands as his undisclosed income. By making regular assessment and accepting tax under KVSS, Revenue for all purposes treated them as Dr. Dharmambal's income. If any amount of investment that was found in the name of Dr. Dharmambal is not included in the regular assessment made in her hands and her declaration under KVSS has not been accepted, such amount can be treated as assessee's undisclosed income. Ordered accordingly. With the above observation, this ground is allowed. 173. The next ground urged by the assessee is against the addition made on account of jewellery in assessee's hands under section 69A amounting to ₹ 1,15,41,900 original ground Nos. 7(a) to 7(c). 174. This issue has been dealt with by the Assessing Officer vide paras 7.1 to 7.12 (pages 101 to 109 of the assessment order). During the course of search in the assessee's premises at Anna Nagar a very large quantity of jewellery (18.976 kgs.) and silverwares (63 kgs.) were found, and these items were valued by the registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own brothers-in-law, a cousin, his parents and his parents-in-law. The Assessing Officer did not accept the above claim because he found that the list of jewellery was newly prepared and therefore he held that the list was not prepared from any contemporaneous record and in the absence of which, the list prepared cannot be accepted. The Assessing Officer noted that there was no explanation for the default in filing the wealth-tax returns. He further held that if it was true that Shri Ponnian Selven (assessee's daughter-in-law's father) was in possession of 4 kgs. of gold, what was the need for taking a loan from his provident fund for purchase of jewelleries. The Assessing Officer held that his statement may be self-serving and was given so as to help the father-in-law of his daughter. So, not much significance could be attached to this. The Assessing Officer also contacted the person who is said to have gifted 28 sovereigns to Smt. Neela Senthureswaran. The donor is Shri Natarajan, the maternal uncle of Smt. Neela Senthureswaran. He stated before the Income-tax Officer (Tanjore) that he gifted only 11 sovereigns and not 28 sovereigns. Shri N. Singaraperumal, another maternal uncle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's undisclosed income under section 69A. Being aggrieved by the above order, assessee is in appeal. 175. Assessee's submission is recorded vide paper book-II pages 186 to 191. Assessee's representative submitted that in the preliminary statement itself the assessee had explained about 745 sovereigns i.e., 5960 gms. belonging to the assessee's family members. It is the further explanation of the assessee that vide letter dated 17-1-1997 assessee gave an explanation with regard to the jewellery found and that the Assessing Officer's version given in para 7.6 that no explanation was given was incorrect. Assessee also submits that the Assessing Officer's rejection of any jewellery in the hands of Dr. Dharmambal is incorrect. It is further the case of the assessee that the version of the Assessing Officer is that the assessee should produce evidence to rebut all the findings of Revenue and this only indicates that the assessment order is done not at the satisfaction of the Assessing Officer but on the basis of the findings by ADI. Assessee further submitted that the investigation done by ADI could not be used against him. Most of the persons who were contacted by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings. It is the responsibility of the assessee to prove the genuineness of the gifts said to have been given to Senthureswaran's wife, Smt. Neela. As the statements obtained were contrary to the facts as stated by the assessee, the Assessing Officer is correct in dismissing these fraudulent claims. (c) The Assessing Officer correctly assessed the investments which are not recorded in the books of account and also since the assessee had not offered any satisfactory explanation, the same is correctly brought to tax as the undisclosed income of the assessee." 177. Considering the rival submissions, we are of the view that there is no reason why the Assessing Officer should not accept the assessee's preliminary statement. Assessee's son, Shri Senthureswaran has also stated in his preliminary statement that during the marriage ceremony he had received about ₹ 9-10 lakhs as well as gold ornaments, the details of which were only known to his mother. We have already held hereinabove that there is no reason to disbelieve this statement. There may be impropriety in not filing the wealth-tax returns or in not intimating the persons concerned of the receipt of gifts du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or had no silverwares coming from ancient times. Especially we take this view on the fact that though not on the basis of any seized materials, assessee's mother was a Civil Surgeon in Govt. service for a long time and also assessee's son is employed in a Bank. It is difficult to believe that on no occasion the family had received gifts of silverwares/ornaments. We also find that some of the items are like idols and other items found in the pooja room. From inventories, it is seen that some other items are very old. These factors have not been considered by the Assessing Officer. In view of the above, the additions made being the value of silver items found during the search also require fresh consideration. Assessing Officer may pass appropriate order after giving the assessee an opportunity of being heard. Ordered accordingly. 180. The next ground urged by the assessee is directed against the order of the Assessing Officer making an addition of ₹ 1,69,19,621 and ₹ 2,91,958 being the donations made to Dr. Dharmambal Namasivayam Trust and interest thereon respectively original ground Nos. 9(a) to 9(f). This issue has been dealt with by the Assessing Officer vide par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e household items like an imported fridge costing ₹ 1.75 lakhs, a Sony Home-Theatre, a colour T.V., costly furniture, etc. were also found. In other words, the trustees were clearly enjoying the properties of the trust on clear violation of the provisions of the Income-tax Act. The trust also made payments to M/s. Shibi Travels apparently towards the foreign travel of Sri Senthureswaran, a trustee, and his wife just after their marriage. Assessee's Chartered Accountant vide letter dated 18-11-1996 explained the purpose for which certain withdrawals had been made from D.N. Trust and also explained by a subsequent letter that the trust had filed its returns for the preceding years. It was also explained that the marriage-hall was booked by the trust for getting priority. This was not accepted by the Assessing Officer on the ground that whoever books the hall will be allowed to conduct functions if there were no advance bookings. The Assessing Officer also found that several lakhs of rupees received by the trust were in fact assessee's ill-gotten money routed through various sources. For example, one of the persons who is said to have given donation was Sri Nadadur Vardhan, a U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sampath Kumar is the game of basketball and the children of both of them are basketball players. Sri Sampath Kumar was a frequent visitor to assessee's house. Vide para 9.12 the Assessing Officer records some of the transactions which were reflected in D.N. Trust funds by way of donations. Vide para 9.14, the Assessing Officer also records that in a letter dated 21-6-1995 Sri Sampath Kumar had urged Sri Vardhan to expeditiously pay ₹ 15 lakhs as donation to D.N. Trust and save him from embarassment as he had already received some money from his friend. The friend is confirmed by Sri Sampath Kumar as the assessee. 182. Subsequently, Sri Sampath Kumar claimed that he had repaid the amount taken from Sri Vardhan from his agricultural income which could not be substantiated. On further questioning, it was found that Sri Sampath Kumar was a hawala agent and he was collecting a definite premium at the rate of ₹ 2.50 per US $ for arranging remittance of US Dollars against payment of rupees in exchange, illegally. The Assessing Officer concluded that this clearly indicates that the assessee was paying back to Sri Sampath Kumar in Indian rupee not only the alleged donation but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. Therefore, the Assessing Officer rejected the donation of ₹ 49,000. There was also donation of ₹ 49,000 from Smt. Vijayalakshmi. She was also questioned on 7-12-1996 and she denied having given any cash donation to the trust of the assessee. Another donor was Smt. Meenakshi Devi alias Devi who is said to have donated ₹ 40,000. She in her letter addressed to the Revenue stated that she had not given any donation but only her husband donated it in her name. The Assessing Officer held that all these indicate that the claim of donations was false and he made the impugned addition of ₹ 1,69,19,621 and interest thereon of ₹ 2,91,958. Assessee is in appeal before the Tribunal. 183. Assessee's written submission against this addition is at pages 191 to 199 of Vol. II of the assessee's paper book. It is submitted that the various instances of violation of trust deed and using it for personal purposes are not relevant as far as section 158BC proceedings are concerned. It is relevant only for the assessment of the Trust. Assessee's representative objected to the observations against the assessee like the Trust's activity is not so charitable etc., and the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer acts upon the basis of the material seized which was never revealed to the assessee. Assessee was never allowed to question Sri Sampath Kumar and even his statement was not recorded in assessee's presence. The Assessing Officer further dismisses the sworn statement contradicting his earlier statement on the ground that it was clearly to help the assessee out of difficulties how faced and therefore has to be ignored. Assessee's representative submitted that when the statement went against the assessee it has to be accepted and when it is in favour the assessee it has to be ignored. He wondered how such a situation could be accepted which is against the principles of natural justice. Not only that, the examination was done behind the back of the assessee and that too without giving an opportunity for cross-examination, and then the affidavit is being ignored without even questioning Sri Sampath Kumar and eliciting from him how he substantiated the averments made in the affidavit and why he had made the changes. Assessee's representative submits at page 195 of the written submission (Vol. II) "At this juncture I would like to recall the submissions made in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Kirtilal Kalidas & Co.'s case (supra), the assessee's representative submitted that the monies have gone to the trust and it has been recorded in its books of account, and as such, it cannot be treated as assessee's undisclosed income. 188. In reply to the above, the Revenue's submission is that the Assessing Officer had ample evidence to believe that the alleged donations to the trust were nothing but re-routing of the assessee's own undisclosed income. The assessee failed to prove by not producing the said donors inspite of sufficient opportunities given to the assessee. The Trust was formed by a deed dated 16-12-1992. It was for charitable purposes like relief to the poor, education, medical and any other charitable object of general public utility. It is registered under section 12A of the Income-tax Act. Exemption is also granted under section 80G for the period 3-2-1993 to 2-2-1994. The Assessing Officer has proved that the income of the Trust was the undisclosed income of the assessee. Assessee had not disproved the finding of the Assessing Officer. Sri Vardhan has not made any donation, only Sampath Kumar. During the search and seizure action, Sri Sampath Kumar entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement and subsequent question and answer were extracted from him but these were kept away from the assessee. Copies were not provided to the assessee so as to enable the assessee to cross-examine Sri Sampath Kumar. The copies were provided after 9 months, so also the statement extracted by the Enforcement Directorate. The preliminary statement recorded from Sri Sampath Kumar is placed at page 76 of the paper book in the case of Sampath Kumar IT (S & S) A.No. 6/01. He explains answering question No. 4 that he visited the assessee to get a certificate from the Basketball Federation of India for his son as Mr. Dyaneswaran is the Chairman of TNBA. He refused to tell the reason for bringing ₹ 2 lakhs and odd and also the source of cash. He stated that normally he used to carry substantial cash, if available, for business purposes. Various papers found from his briefcase were put before him for explanation. In most of the cases, he was not willing to give any explanation or something to that effect. With regard to papers relatable to Shri Palaniappan (Q.11), he gave some explanation. Regarding M/s. Shilpi Construction, he expressed his ignorance. At one place (page 91) of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is on the basis of these statements that Revenue came to the conclusion that the money was received back from the assessee. But it is seen from a letter issued by the revenue to Sri Sampath Kumar dated 12-2-997 (para 3.9) that Sri Sampath Kumar was also having a business in the name of Jayalakshmi Finance, the details of which were not made available to the revenue. All these and also the questions and answers from the Enforcement Directorate indicate that Sri Sampath Kumar was having business in the form of Hawala transactions, financing, etc. It is to be seen that the questions and answers were not made available to the assessee for cross-examination, before using them against the assessee. There is no direct reference of the assessee in these letters. But only in the statement, he stated that the 'friend' referred to the assessee. We are afraid, this alone is not sufficient to prove the assessee's involvement, in the absence of direct payments by the assessee. It is also to be seen that the amount is going from the account of Sri Sampath Kumar to the Trust. There may be shady deals which lead to strong suspicion, but suspicion will not take the place of evidence. It is to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upto ₹ 56.05. However, as per the balance-sheet as on 22-11-995 filed in respect of this concern, the capital was ₹ 59,46,738. Assessee was operating the account as legal representative. The entire amount was treated as assessee's undisclosed income for the assessment years 1995-96 and 1996-97. 193. Vide para 10.3, the Assessing Officer states that a house was purchased in the names of assessee's two sons in May 1992 and September 1992 for a consideration of ₹ 21,60,509 and additional expenditure of ₹ 7,24,000 was incurred for additional construction which was spread over accounting periods 1994-95 & 1995-96. The total addition made on this account was ₹ 29,84,509. 194. Vide para 10.4, the Assessing Officer made an addition of ₹ 21,69,229 being Senthureswaran's investment in purchase of shares in M/s. Nelliyan Stocks. He also purchased shares in the names of Dr. Dharmambal and M/s. Dhandapani Investments. Copies of the accounts were obtained from M/s. Nelliyan Stocks. Another addition made for the assessment year 1996-97 is an advance made to Sri Arivalalgan on pro-note executed by him in favour of Dr. Dharmambal, which was a seized material. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stral village, Arasangudi. This was on the basis of the valuation report of the departmental valuer. 200. Another addition was made of ₹ 10,99,782 which was paid in the name of Shilpi Grih Constructions. However, this was not separately added as this was reflected in the Shilpi's account. 201. The next addition was made of ₹ 9,33,700. The Assessing Officer found that substantial investment to the tune of about ₹ 48,06,000 had been made in the property being constructed near the Basketball Stadium at Play Ground Street, Kilpauk, Madras. The cost of land was taken at ₹ 33.06 lakhs and the investment at ₹ 48.06 lakhs. This was reflected in the balance-sheet of the trust to the tune of ₹ 38,72,225 and the difference was added in the hands of the assessee. 202. Another addition of ₹ 22,06,503 was made on account of the value of one-third share in the property at No. 114, Usman Road purchased in the name of M/s. Shilpi Grih Constructions. This was not separately added as it was reflected in the account of M/s. Shilpi Grih Constructions 203. The next investment found was ₹ 48 lakhs in a company styled 'M/s. Sribala & Co.', which was refl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (b)1995-96 - Kodaikanal property 20,46,000 (c)Minjur property 8,75,000 (d)Profit out of Minjur property 17,60,808 (e)Profit out of V. Kalathur (Granite) 30,40,000 ₹ 1,16,21,808 204. Vide para 10.22, the Assessing Officer records about the marriage expenses of assessee's elder son Sri Senthureswaran. The seized materials showed the expenses at ₹ 6 lakhs. There was a trip abroad to Singapore by the couple. The expenses of the trip come to ₹ 1.48 lakhs. Thus, the Assessing Officer estimated the marriage expenses at ₹ 7.5 lakhs. This was added for assessment year 1996-97. 205. Another investment found was in M/s. Pluto Granites, Madurai. The investment in this proprietary concern was to the tune of ₹ 11.05 lakhs. However, the assessee denied any involvement in this business. He claimed that only his mother is a partner and not he. The other partner also confirmed the same vide his letter dated 14-11-1996. Since the monies were received through the assessee and as no explanation was forthcoming about the source, the Assessing Officer treated this also as assessee's income for the assessment year 1996-97. Thereafter, another investment was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1996-97 being an investment made by the assessee in the shares of INAS Benefit Fund in the names of assessee's wife, Smt. Prema Dyaneswaran and mother, Dr. Dharmambal. 212. It was further found (para 10.37) that an advance of ₹ 2 lakhs was made by the assessee to Shri Mukundan. However, after admitting it, Shri Mukundan retracted from his statement, stating that it was received from Dr. Dharmambal. This explanation was rejected and this amount added to the income of the assessee for the assessment year 1992-93. 213. Another addition was made on the basis of seized material No. ZT/B&D/S-24 (Sheet No. 17). This was an advance made to one Shri S. Navaneetha Krishnan of ₹ 28,200 in the assessment year 1989-90. 214. Vide para 10.39, the Assessing Officer records that there were deposits made in the accounts of Dr. Dharmambal, Sri Senthureswaran and D.N. Trust. Except the pension of Dr. Dharmambal and salary of Sri Senthureswaran, the balance amount found deposited was added as the assessee's undisclosed income. This was telescoped into the undisclosed income computed by way of receipt by the assessee from applicants for mining licence, and as such no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harmambal was a Civil Surgeon (Gynaecologist) who retired from service in 1976 and after retirement, even if she is treated as a practising Gynaecologist, that she has earned money to such an extent of ₹ 59 lakhs and odd. Will this fact alone is sufficient to hold that the investment is made by the assessee, because section 158BB under chapter XIV-B is very specific. It reads : "The undisclosed income of the block period shall be the aggregate computed, in accordance with the provisions of chapter IV, on the basis of evidence found as a result of search or requisition of books of account or document 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 ....." 219. During the search, documents have been seized which are found in the name of Dr. Dharmambal. The Assessing Officer has reasonably come to the conclusion that she could not have made investment to this extent. But no material has been seized linking the assessee directly in respect of this investment except the fact that Revenue was in possession of evidence that assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has, in fact, treated the protective assessment as substantive assessment in his hands. The letter is placed in assessee's paper book (pages 267 to 271). In his letter at page 269 he also requested Revenue that if his assessment has not become final and if not treated as substantive, to return his money recovered from his fixed deposits with interest. The declaration made with the above prayer has been accepted under KVSS. It is claimed that tax was also paid. If that be so, there is no reason to treat it again as substantive in assessee's hands. All these indicate that in fact, Revenue has treated the assessment in Senthureswaran's hands as substantive and not as protective. In these circumstances, we have to hold that this addition in the hands of the assessee cannot survive. It is accordingly deleted. 221. Coming to the investment in shares, the finding given above is equally applicable. Though the assessee claimed that this is from the money given by Dr. Dharmambal, her source has not been proved. However, as we have mentioned hereinabove that since the assessment has been made under section 143(3) read with section 147 which means regular assessment and that too without is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2,30,000 being fixed deposit in the name of Sri Senthureswaran. We have already held that since the assessment was completed under section 143(3) and also the declaration of Sri Senthureswaran under KVSS has been accepted, it cannot be treated in the hands of the assessee. We have already held hereinabove, while dealing with similar points, that a material seized as a result of search cannot be the basis for regular assessment as well as protective assessment. As such, we are of the view that since this addition was made in the hands of Senthureswaran on regular basis, it cannot be retained in the hands of the assessee. In addition to this, the declaration by Senthureswaran under KVSS has also been accepted. Hence, this addition is also deleted. 226. Coming to the purchase of gun for ₹ 50,000, this is claimed to be from agricultural income. We find it extremely difficult to accept this proposition. Assessee has admitted, it was purchased from his own source. But no evidence has been adduced before the Revenue. In the interest of justice we remand the matter back to the file of Assessing Officer to re-do the assessment on this point. Assessee may be given an opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een rejected while dealing with the preliminary issues. The explanation of the assessee is that Dr. Dharmambal was staying with his sons and she should have been asked for the source. This explanation has no merit. But, at the same time, we find considerable force in the claim of the assessee that many of these items were received as gifts at the time of marriage of his son, Senthureswaran. Though there is no evidence, but there is no reason to shut our eyes towards the reality. In the preliminary statement the assessee has stated that some of these items were received as gifts from family members during the marriage ceremony of his son and some items were ancestral properties. It is also to be seen that this is a common house where his mother late Dr. Dharmambal, assessee's elder son's wife and daughter, Senthureswaran and his brother, all lived together. In these circumstances, unless there is a clear evidence to link the assessee with everything, there cannot be any addition in the hands of the assessee in this regard. Some of the items (like split AC) are claimed by the assessee and also by the Revenue as belonging to Dr. Dharmambal Trust. However, even such items are also trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, there is no reason to make this addition in the hands of the assessee. The Assessing Officer has not considered the above submission now made before us. It is also not clear as to whether any submission was made before the Assessing Officer to that effect. In the light of the submission that the property stands in the name of the Trust, we are of the view that the issue also has to go back for fresh consideration. Ordered accordingly. 232. Now coming to M/s. Sribala & Co., it is the case of the assessee that Dr. Dharmambal admitted in the affidavit of financing this company to the tune of ₹ 48 lakhs. This company is engaged in real estate business. While dealing with the affidavit of Dr. Dharmambal, we have rejected the affidavit for the reasons stated therein. It is the case of the Revenue that though this is claimed to be a proprietary concern of Smt. Sivabala devi, sister of Prema Dyaneswaran, the seized materials contained documents which are some sort of rough draft of partnership and compromise deeds in respect of some dispute between the assessee and Shri Rajendran, husband of Sivabala. Here again we find that if it is treated in the hands of Dr. Dharmambal on regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KVSS benefit availed by Dr. Dharmambal. With the above observation, this ground is also remanded to the Assessing Officer for deciding the issue on the basis of evidence after affording assessee an opportunity. Ordered accordingly. 233. Coming to the additions made vide para 10.20 i.e., with regard to "Lock End Compound" property in Kodaikanal which is again linked with Sribala & Co. and also the purchase of property at Minjoor, all these are done in the name of Sribala & Co. The evidence that the Revenue finds against the assessee is the notings by the assessee on the set of documents which indicate assessee's involvement in the transactions. Here again we have to say that the source of investment is claimed as assessee's mother's and the assessment was completed on regular basis in her name. We are unable to appreciate the observation of the Assessing Officer made in para 10.21 that there are evidences to indicate that assessee received ₹ 30 lakhs and odd through his wife. If the investment is made either by assessee or his mother, why the receipt was through his wife. In the light of the above facts, we are of the view that the issue has to go back to the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular assessment of the assessee's mother in whose name the documents were found. Till the contrary is proved, the apparent is to be treated as real and Revenue has also accepted assessee's mother's declaration under KVSS. Hence, this addition in the hands of the assessee is deleted. 237. As regards Shri Senthureswaran's investment in Unique Minerals, Erode, we are of the view that this cannot be treated in assessee's hands. Shri Senthureswaran is an officer of the bank having his source of income. The shares also stand in the name of Shri Senthureswaran. The suspicion may be well-found, but will not take the place of evidence. Further, we have held while dealing with Shri Sentheureswaran's investments that by appropriating the fixed deposits etc., Revenue has again treated these investments in the hands of Senthureswaran on substantive basis. In the absence of clear evidence to link the assessee, the addition made in the hands of the assessee in this respect cannot be sustained. It is accordingly deleted. 238. Coming to the addition made with regard to the investment in M/s. Agilandeswari Granites, the partnership deed dated 1-9-1994 shows that Dr. Dharmambal was a partner in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not explained the source of this repayment. Hence, this addition is confirmed in the hands of the assessee. Assessee's explanation is that Dr. Dharmambal had taken a loan of ₹ 9 lakhs etc. The source of repayment is to be explained properly. It has not been done. Mere claim that it was repaid is not sufficient. Assessee, being the power of attorney holder, may explain the repayment. At the same time, there is no evidence either to show that assessee is directly linked in this transaction. This ground is remanded for verification and to decide the issue afresh. 242. Again, coming to the purchase of site at Mogappier in the name of assessee's son, we are of the view that the share of Senthureswaran in the investment cannot be ignored, as he is a bank officer having his own source of income, unless there is evidence to show that investment was made by assessee. Therefore, addition cannot be made in the hands of the assessee on the basis of the suspicion that investment was made by the assessee himself. In the case of assessee's second son, Shri Suguvaneswaran, it is to be seen that assessee's late mother had left legacies in favour of her second grand-son through the will. She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther claimed that such income was used for charitable activity. The source of investment is attributed to assessee without any discussion. We have to hold that addition without any discussion cannot be held as proper. Only to the extent of ₹ 1 lakh found to be invested in assessee's wife's name is remanded for fresh consideration. Balance amount found in the name of Dr. Dharmambal is deleted. Ordered accordingly. 247. The next addition of ₹ 2 lakhs relates to the advance given to Shri Mukundan. Shri Mukundan, though first confirmed that ₹ 2 lakhs was advanced to him, subsequently he retracted from his statement. In the light of subsequent retraction the issue needs fresh consideration. It is also not clear whether the income is assessed in his name also. If it is assessed in his hands on regular basis and tax paid, it cannot be assessed again in assessee's hands. With the above observation, this ground is also remanded to the Assessing Officer. 248. Coming to the addition of ₹ 28,200 on account of the loan given to Shri Navaneethakrishnan, driver of the assessee, it is not disputed that this advance was made by the assessee himself. Assessee may explain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MIN nor any foreign buyer paid inspection charges. Smt. Kumari Kanakam was examined on this point. She stated that she did not have the details of the credits in her account though she admitted the opening of the said account. Only her mother and brothers who were in Singapore would be in a position to explain the details. The Assessing Officer noted that M/s. Orient Sangyo Kaisha Ltd. was one of the regular and large importers of granite from TAMIN. The local office of M/s. Orient Sangyao Kaisha Ltd., was requested to ascertain from their Head Office in Tokyo the facts concerning their fax message which was seized from the assessee's house. Mr. Tanaka of M/s Orient Sangyao Kaisha Ltd., Japan faxed his reply to their local office in Madras and they confirmed the payment in the account of Smt. Kumari Kanakam. He also confirmed meeting her and Shri Dyaneswaran in Singapore. Kumari Kanakam was interrogated on these facts on the basis of the information obtained. She denied any knowledge about M/s. Orient Sangyao Kaisha Ltd., Japan. Since no other details were available with regard to the credits in the account of Smt. Kumari Kanakam, the Assessing Officer presumed that the credits rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 11 : Vide paras 11.1 to 11.7 of the assessment order, the Assessing Officer clearly brought out the deposits in foreign bank account of Smt. Kumari Kanakam into the computation of the total income. These deposits aggregating to ₹ 25,87,343 were lying with Overseas Union Bank Ltd., Singapore. The Assessing Officer came to the conclusion by treating this as undisclosed income of the assessee by relying on seized materials and other documentary evidences. There is also a fax message included in these seized documents which clearly states that US $ 7225 were credited in the said a/c of Smt. Kum. Kanakam on 27-2-1995 by M/s. Orient Sangyao Kaisha Ltd., Japan. When Smt. Kumari Kanakam was examined in this regard by the assessing officer, she failed to give the details of the credits in her account. It may be mentioned here that Smt. Kanakam is the assessee's wife's sister-in-law. The assessee being Chairman of TAMIN received this money in foreign currency and credited the same in her account after converting the same into Indian rupees. It aggregates to ₹ 25,87,343. The circumstantial evidence show that the same was received by the assessee from the clients of TAMIN when he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt, Kanakam and her husband, they might have left behind the cheque book, bank pass-book, etc. through inadvertence, which is not convincing. However is deposited in somebody-else's account. No evidence to the effect that it is assessee's income. The party in whose account the amount as a credited is a Singapore Citizen. Assessee claims, the person said to be 'Him' in the fax is not assessee as he was not at Singapore at that time. This can be established from his pass-port. The Assessing Officer may ascertain the veracity of the above statement and then pass appropriate order. Ordered accordingly. 253. The next addition made by the Assessing Officer is an amount of ₹ 1,34,46,588 as secret commission [original ground Nos. 12(a) to 12(c)]. According to the assessee, there is no corroborative evidence to come to the conclusion that assessee had received any secret commission. 254. This issue has been dealt with by the Assessing Officer vide paras 12.1 to 12.6 (pages 138 to 141) of the assessment order. During the search and seizure action, a set of documents was seized marked NGN/B&D/LS/S-14 (enclosed as annexure A) which indicated certain details of payments made by two for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,56,124 and ₹ 1,51,515 relating to INBRA to arrive at the figure of ₹ 3,07,639. Again in the next document as against ₹ 5,11,750 the assessee has written "10-8-1992 -3 lakhs" and 11/8/1992 - 2,11,750". Assessing Officer further records, page No. 8 (Annexure to assessment order - page 105) mentions "received at Italy 30,200" and the balance of 12,130 only was converted to rupees. The Assessing Officer further found that from 28-5-1992 to 5-6-1992 assessee was in Italy. He records that this cannot be dismissed as mere coincidence. The Assessing Officer held that the commission received from M/s. Orient Sangyao Kaisha Ltd. of Japan as inspection charges might be the amount that went to the personal account of the assessee in his capacity as Chairman of TAMIN. This paper was found during the search in 1996 whereas the account relates to the period 1992. It is very significant that the assessee was carrying the papers connected with 1992 exports in his brief case even during the assessment year 1996-97. It might have some special significance, the Assessing Officer records, and thereby he totalled all the amounts and added the sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some payments made and not any amount received by the assessee. The stand of the revenue that the assessee himself prepared these papers as a record of payments received by him and the amounts mentioned therein represent the amounts paid by these parties to the assessee and that it is the assessee's undisclosed income is without any basis. If the assessee had prepared these papers to keep a note of the amounts he had received, the heading should have been 'Details of payments received' indicating the receipt by the assessee. Therefore, it is the submission of the assessee that these papers could not have been prepared by the assessee. At page 140 - para 12.5, the Assessing Officer speaks of notings like "paid on....; Pd on.....' etc.". These again indicate the payments made by the persons who prepared these papers. It is not the case of the Revenue that the assessee made these papers. The Assessing Officer speaks of the "internal consistency of these documents" and then proceeds to try and prove assessee's involvement by referring to certain pages and notings in the seized papers. The assessing officer states that some of the notings are in the handwriting of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey belonged to the assessee. The Assessing Officer's conclusion "Under such circumstances hereinabove narrated, it can only be concluded that the amounts mentioned in these documents represent payments to the assessee from these companies (directly or indirectly)". It means, the assessing officer makes the addition purely on circumstances mentioned in para 12.5. The circumstances demonstrated that it is only surmise and not on the basis of any evidence or proof. The hollowness of the assessing officer's observation is that this connected with the assessee directly or indirectly. It means, he himself is not sure of his stand and to whom the payment was made. The circumstances mentioned by the Assessing Officer are purely surmises and presumptions, assessee's representative submitted. 256. In reply to the above Revenue's submissions are as follows : "The assessing officer vide paras 12.1 to 13.5 of the assessment order discussed in detail the modus operandi employed by the assessee with respect of secret commission received from foreign companies. The Assessing Officer relied on seized documents to arrive at this conclusion. From the seized documents as narrated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and also "2" just before ₹ 11,750. At the same time, there is a slight resemblance in the writing of other "2" i.e., 92 and the figure mentioned 22 at page 104. Again, it appears that the hand-written figure on paper book page 102 of Annexure mentioned below appears to be different from the handwriting on the top. Now coming to Revenue's paper book Vol. II - page 105 which deals with the amount received in Italy etc. as rightly contended by the assessee's representative, on the top of the page it is mentioned due to "T". It is difficult to guess who is this "T". Incidentally, 'T' is the 1st letter of TAMIN. Does this indicate the payment due to TAMIN. We are also unable to guess. The copies of the documents forwarded to TAMIN for comments are not placed before us. The reply of TAMIN in which TAMIN stated" a large number of these transactions mentioned in the document may be straightaway connected with this". This letter dated 27-11-1996 is also not placed before us. Assessee made a request for a copy of the reply of TAMIN so that he could tally the figures etc. and give proper answers. This was also not accepted. Finally, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation), Madras and subsequently by a letter she was summoned. During the hearing also, the assessee repeated the same claims. Mrs. Seethalakshmi also filed a letter on 6-2-1996 claiming that during their trips from USA, they had legally brought into India foreign currencies and it was within the exemption/permissible limits under FERA regulations. By a letter dated 15-12-1996, she was summoned to the Income-tax Office, and there was no response. On another occasion also, the summons issued returned with the remark "door locked". The Assessing Officer held that in spite of the fact that she had given a statement before the Enforcement Directorate, her version lacks credibility. He also held that there was no reason for Smt. Seethalakshmi to hand over the foreign currencies to the assessee. In addition to this, there was no receipt issued to Smt. Seethalakshmi. He also found that Smt. Seethalakshmi's letter dated 6-2-1996 was vague. Except claiming that the dollars were brought legally, no details of the trips nor of the amounts brought by her were mentioned in the said letter. There was no reason also why the money was brought at M-26, Annanagar and handed over to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of search at M-26, Anna Nagar, Chennai - 102 different foreign currencies equivalent to ₹ 1,93,040 was seized. The statements given by Mrs. Seethalakshmi who is said to be a family friend of the assessee had been varying from time to time, regarding her ownership of the amount. As the currency was found during the course of search and seizure under section 132, the provisions of section 132(4A) squarely apply. It is the responsibility of the assessee to prove that these currencies do not belong to him. The assessee has not filed any proof, apart from a letter from Smt. Seethalakshmi. The Assessing Officer had also carefully perused the statement given to the Enforcement Directorate by the assessee. After in depth and careful consideration, the Assessing Officer treated this income as undisclosed income of the assessee." 260. On going through the rival submissions as well as the order of the Assessing Officer, we are of the view that this addition cannot be retained in the hands of the assessee. It is a fact that Smt. Seethalakshmi Nagaraj had, in her sworn statement before the Enforcement Directorate, explained how the money was brought into India. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person ever lived at this address. Later, Shri Narayanan was located in 10/996, Petha Perumal Lane, West Main Street, Thanjavur and a statement was recorded from him on 1-2-1996. Though initially, Shri Narayanan stated that the fixed deposits were made out of his own resources, on further questioning, he admitted answering Q. No. 26 that the fixed deposits were made by him out of the money given by Shri A.N. Dyaneswaran (assessee). He further stated that his friendship with the assessee developed from the days when the assessee was working as RDO/DSO in Thanjavur and he was working in the same office as a clerk. He further stated that as required by Shri Dyaneswaran, he went over to Chennai from Thanjavur and deposited the money given by Shri Dyaneswaran in the banks and handed over the receipts to the assessee. Subsequently, Shri Narayanan wrote a letter to the Assistant Director of Income-tax (Inv.), Chennai, on 4-2-1996, stating that the statement given by him earlier on 1-2-1996 was under duress. He retracted from his earlier statement and confirmed that the deposits were made out of his own sources and the source was explained to be agricultural income. When questioned as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of ₹ 1500 every year. The Assessing Officer estimated the probable expenses and thereafter, he came to the conclusion that even assuming that he had agricultural income it could be only around ₹ 2,85,000 maximum for the reasons stated on pages 148 and 149 of his order. Further, he found that Shri Narayanan had constructed a house spending about ₹ 1.20 lakh and he had claimed that he purchased a plot of land for ₹ 28,000 in Thanjavur. Under these circumstances, it is impossible, the Assessing Officer held, to believe that Shri Narayanan had ₹ 15 lakhs by way of fixed deposits. The Assessing Officer further found that though Shri Narayanan was resident of Thanjavur, he had not made any deposit there but he went all the way to Madras to make the deposits. Hence, the Assessing Officer held that since the fixed deposit receipts were seized from the residence of the assessee, it could be assessee's deposits only. He, therefore, added this amount as undisclosed income to the assessee's income. Assessee is in appeal before the Tribunal. 264. It is submitted on behalf of the assessee that Shri Narayanan has admitted that the fixed deposits have been made ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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