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TMI Blog2019 (10) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case but this Tribunal order is relevant regarding this aspect that merely on the basis of the statement recorded during the course of search, an addition cannot be made blindly and the same has to be examined as per the relevant facts and law. In the present case also, although some papers were found and seized and surrender was also made by assessee up to ₹ 93 Lakhs out of amount noted in seized paper of ₹ 1,39,08,062/-, neither the AO nor ld. CIT(A) has corroborated the amount of addition with the entries in the seized material even on sample basis to show that the entry in the seized material is in fact regarding some undisclosed income of the assessee. The surrender of the assessee of ₹ 93 Lakhs is also not correlated with the seized material - we hold that the addition made by the AO and confirmed by CIT(A) merely on the basis of statement without establishing that the entry on the seized paper is indicating any undisclosed income of the assessee is not sustainable and hence, we delete the same. Unexplained investment in gold bullion - HELD THAT:- As per the balance sheet as on 31.03.2009 of Shri Somashekar available on page no. 14 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court in the case of UOI vs. Ajit Jain, reported in 260 ITR 80. iii. The learned authorities below has not discharged the burden of proving that there is a valid initiation of search under section 132(1)(a) (b) (c) of the Act, its execution and its completion in accordance with law to render the proceedings valid and to assume jurisdiction to make an assessment under section 153A of the Act. Reliance is placed on the decision of the Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy Vs. ACIT, reported in 339 ITR 210. iv. The authorities below failed to appreciate that a valid search is a sine qua non for making a valid assessment under section 153A of the Act on the parity of the ratio of the decision of the Hon'ble Apex Court in the case of UOI vs. Ajit Jain, reported in 260 ITR 80. v. The order of the assessment is bad in law as the mandatory conditions to invoke the jurisdiction under section 153A of the Act did not exist, or having not been complied with and consequently the order of assessment is bad in law for want of requisite jurisdiction. 4. The assessing officer erred in making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the additions which is being disputed by assessee from ground nos. 4 and 5 and also ground nos. 6 and 7 and the same can be considered for the purpose of deciding these grounds. Regarding ground nos. 4 and 5, he pointed out that AO added a sum of ₹ 1,39,08,062/- based on the seized material found in the residential premises of Mr. Vivekananda. He also pointed out that during the search and post search proceedings, the assessee had erroneously mentioned in the course of recording of statements that certain entries notings in the seized materials found in the premises of Mr. Vivekananda were of the payments made for expenses of ₹ 1,39,08,062/- and he has agreed to offer a sum of ₹ 93 Lakhs as undisclosed income for the impugned assessment year, on a mistaken notion of facts. But subsequently, as per letter filed by the assessee before the AO on 07.03.2013, it was explained that the transactions covered as per the seized material pertained to M/s. ILC Industries and its group concerns and the assessee had explained that details of personal expenses, telephone bills, electricity bills, bus tickets etc. were all part of the seized materials and they were debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO and these invoices were also filed before the AO and the return of income of these HUF were also filed on 16.07.2010. It was submitted that although the AO and ld. CIT(A) has not accepted this explanation but the same should be accepted and this addition should be deleted. 6. As against this, the ld. DR of revenue supported the orders of authorities below. Regarding ground nos. 4 and 5, it was submitted by him that on page no. 3 of the assessment order, the AO has reproduced question no. 5 and its answer in course of statement of Oath u/s. 131 of the IT Act recorded on 03.02.2011 in which it has been accepted by the assessee himself that out of this amount of ₹ 1,39,08,062/-, an amount of ₹ 93 Lakhs is not accounted for in the books of accounts and these expenses were incurred out of undisclosed income and therefore, assessee declared this amount for taxation in his individual hands for Assessment Year 2009-10. He also drawn our attention to page no. 5 of the assessment order and pointed out that since the seized material is containing an amount of ₹ 1,39,08,062/- out of which the assessee has made declaration of undisclosed income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of assessee on page no. 4 of the assessment order, the AO has proceeded only on this basis that the assessee has accepted to offer this income for Assessment Year 2010-11 but it is seen that the entries in the seized material A/OV/06 pertains to the period from 09.04.2008 to 12.11.2008 and therefore same is taxable in Assessment Year 2009-10. He made addition of the whole amount of ₹ 1,39,08,062/- although the disclosure was only of ₹ 93 Lakhs. Hence it is seen that in spite of this claim of the assessee before AO in course of assessment proceedings regarding the alleged undisclosed income as per seized material and the earlier declaration in search proceedings that such declaration was under wrong notion of facts, the AO has not given any finding as to how the seized material supports the allegation of unaccounted income. Under these facts, we now examine the applicability of various judgments cited by ld. AR of assessee. The first judgment cited is of the Hon ble Apex Court rendered in the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala and another (supra). We first reproduce para 4 of this judgment from page no. 2 of the case law paper book. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g evidence against undisclosed income was required, which could not be found by the Assessing Officer. The Assessing Officer had made an addition merely on the basis of a statement recorded during survey under Section 133A of the Income Tax Act. The CIT (A) and the Tribunal had deleted it by holding that merely on the basis of such statement without corroboration, such addition could not be made. 10. As per this para of the judgment of the Hon ble Madhya Pradesh High Court, it is seen that it was held in this case that the AO made an addition merely on the basis of a statement recorded during survey u/s. 133A of the IT Act and ld. CIT(A) and the Tribunal had deleted it by holding that merely on the basis of such statement without corroboration, such addition could not be made and when the appeal was filed by the revenue against this Tribunal order before the Hon ble Madhya Pradesh High Court, the same was dismissed by Hon ble Madhya Pradesh High Court. 11. Now we examine the applicability of the Tribunal order rendered in the case of Arun Kumar Bhansali vs. DCIT (supra). As per the facts noted by the Tribunal in this case, during the course of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 (AP) for the proposition that the income from chit is by way of. income from oneself and hence applying the principle of mutuality, such income cannot be treated as undisclosed income even though declared by the assessee. Learned CIT(A) dismissed this ground holding that the assessee himself has admitted having conducted chit business. Material was found during search. The assessee was confronted by AO. Since he himself has admitted having earned income of ₹ 4 lakhs, the addition was upheld. 2.1 Learned counsel for assessee, Shri Laxminarasimhan submitted that even though the assessee had admitted, still the income is to be treated as exempt on the principle of mutuality. There cannot be concession against the provision of law. If the income is exempt, even though it is admitted, the same has to be excluded, as the income is to be computed according to the provision of IT Act and not merely on the admission of assessee. He once again relied upon the decision of Hon'ble Andhra Pradesh High Court in the case of Nataraj Finance Corporation (supra). He further relied upon the decision of Hon'ble Supreme Court in the case of CIT v. Bankipur Club Ltd . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this order of ld. CIT(A), the revenue was in appeal before the Tribunal. It is noted by the Tribunal in this case that the disclosure was not based on any calculation of undisclosed income on the basis of seized papers / documents. It is also noted that the disclosure so made was also not based on any unaccounted assets / valuables. The Tribunal has reproduced the instruction no. F.No. 286/2/2003-IT(Inv.II) dated 10.03.2003 on page no. 31 of the case law paper book and in particular this is the instruction in this instruction that in course of pending assessment proceedings, the AO should rely upon the evidences / materials gathered during the course of search / survey operations or thereafter while framing the relevant assessment orders. It was held by the Tribunal that no addition can be made merely on the basis of evidence found against the assessee. 14. In the present case also, although some papers were found and seized and surrender was also made by assessee up to ₹ 93 Lakhs out of amount noted in seized paper of ₹ 1,39,08,062/-, neither the AO nor ld. CIT(A) has corroborated the amount of addition with the entries in the seized material even on sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to search and the assessee has also submitted the relevant invoices copy before the AO also which are dated 03.11.2008. Still the AO is stating on page no. 8 of the assessment order that the assessee s claim that the gold bars were declared in the hands of Shri K. Somashekar (HUF) and Shri Chandrashekar (HUF) for the Assessment Year 2009-10 is without adequate evidences and it is only an afterthought designed to suit the necessity of the assessee without pointing out any defect in the invoice dated 03.11.2008 submitted by the assessee before the AO. If the AO was not satisfied, he would have established that these invoices are bogus or that there is no source in the hands of these two HUFs. These invoices are available before us also on page nos. 10 and 11 of the paper book and as per the same, one Kg bullion was purchased by K. Somashekar from Ambicaa Sales Corporation, Bangalore on 03.11.2008 as per invoice no. 2460 and similarly, one kg gold bullion was purchased by K. Chandra shekar from the same party i.e. Ambicaa Sales Corporation as per invoice no. 2465 on 04.11.2008. The return of income was filed by Shri K. Somashekar (HUF) on 16.07.2010 as per copy of return of income av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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