ACIT, CHENNAI V. T.Dhevanathan, CHENNAI

ITSSA 18/CHNY/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0975 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 25-06-2015
• Assessment Year: misc
• Appeal Filed On: 16-07-2013
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN
• Keywords: Unexplained cash credit; Unexplained expenditure; Gift; Business income; Salary income; Source of fund; Block assessment; Onus to prove
• Section: 143(3); 133(6); 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] I.T.(SS)A.NO.18/MDS/2013 BLOCK PERIOD 1-4-1996 TO 5-12-2002 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE II(5) CHENNAI VS. SHRI T. DHEVANATHAN NO.3, DHEENADAYALU STREET CHENNAI 17 [PAN AACPD 9566 C] ( %& / APPELLANT) ( '(%& /RESPONDENT) I.T.(SS)A.NO.19/MDS/2013 BLOCK PERIOD 1-4-1996 TO 5-12-2002 SHRI T. DHEVANATHAN NO.3, DHEENADAYALU STREET CHENNAI 17 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE II(5) CHENNAI ( %& / APPELLANT) ( '(%& /RESPONDENT) I.T.A.NO.1187/MDS/2013 ASSESSMENT YEAR : 2000-01 THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE II(5) CHENNAI VS. SHRI T. DHEVANATHAN NO.3, DHEENADAYALU STREET CHENNAI 17 ( %& / APPELLANT) ( '(%& /RESPONDENT) IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 2 -: I.T.A.NO.1022 & 1612/MDS/2013 ASSESSMENT YEAR : 2000-01 & 2003-04 SHRI T. DHEVANATHAN NO.3, DHEENADAYALU STREET CHENNAI 17 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX/DY. CIT CENTRAL CIRCLE II(5) CHENNAI ( %& / APPELLANT) ( '(%& /RESPONDENT) DEPARTMENT BY : SHRI N. RENGARAJ, CIT SHRI A.V. SREEKANTH, JCIT ASSESSEE BY : SHRI N. DEVANATHAN, ADVOCATE / DATE OF HEARING : 25 - 0 6 - 20 15 / DATE OF PRONOUNCEMENT : 14 - 0 8 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE REVENUE AND ASSESSEE FILED APPEALS FOR THE BLOCK PERIOD 1.4.1996 TO 5.12.2002 AND FOR ASSESSMENT YEA R 2000-01. THE ASSESSEE ALSO FILED APPEAL FOR THE ASSESSMENT YEAR 2003-04. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE AP PEALS, WE HEARD THEM TOGETHER AND DISPOSE OF THE SAME BY THIS COMM ON ORDER. 2. LET US FIRST TAKE UP REVENUES APPEAL I.T.(SS)A.NO. 18/MDS/2013. 3. SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASS ESSEE ON 5.12.2002 AND SEVERAL INCRIMINATING DOCUMENTS WERE FOUND DURI NG THE COURSE OF IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 3 -: SEARCH OPERATION. ACCORDING TO THE LD. DR, THE AS SESSEE WAS PROPRIETOR IN M/S RUKMANI INDUSTRIES AND M/S TELESY STEMS INTERNATIONAL. THE ASSESSEE WAS AWARDED CONTRACT BY GOVERNMENT OF INDIA TO TAKE PHOTOGRAPHS FOR VOTERS IDENTITY CARD. THE REVENUE AUTHORITIES ALSO FOUND INVESTMENT TO THE EXTENT OF ` 1,99,64,950/- IN M/S DIKSAAT TRANSWORLD LTD. THE ASSESSEE, BY LETT ER DATED 10.12.2004 GAVE THE DETAILS OF EQUITY SHARES HELD B Y HIM AND HIS FAMILY MEMBERS IN M/S DIKSAAT TRANSWORLD LTD. AS ON 5.12.2002. THE SHARE APPLICATION MONEY CONTRIBUTED BY THE ASSESSE E AND HIS FAMILY MEMBERS WORKS OUT TO ` 1,96,99,950/-. THUS, THE TOTAL CONTRIBUTION MADE BY THE ASSESSEE AND HIS FAMILY MEMBERS IN M/S DIKSAAT TRANSWORLD LTD. WAS TO THE EXTENT OF ` 3,62,16,950/-. FOR THE ENTIRE BLOCK PERIOD THE ASSESSEE HAS NOT REPORTED POSITIV E INCOME AND FOR THE ASSESSMENT YEAR 2000-01 ALONE THE INCOME WAS SH OWN TO THE EXTENT OF ` 23,22,093/-. FOR ALL OTHER YEARS IN THE BLOCK PER IOD THE ASSESSEE RETURNED LOSS IN THE BUSINESS. THE ASSES SEE MADE AN ATTEMPT BEFORE THE ASSESSING OFFICER TO EXPLAIN THE SOURCE AS IF HE HAS RECEIVED CONTRACT FROM GOVERNMENT OF INDIA FOR TAKI NG PHOTOGRAPHS OF THE VOTERS FOR PREPARING THE IDENTITY CARDS. THE A SSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MAINTAINED ANY PRO PER BOOKS OF ACCOUNT AND DOCUMENTS FOR THE BUSINESS. REFERRING TO THE ASSESSMENT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 4 -: ORDER, THE LD. DR SUBMITTED THAT THE ASSESSEES WI FE SMT. D. MEENAKSHI CONTRIBUTED ` 15,01,000/- TOWARDS EQUITY SHARES OF M/S DIKSAAT TRANSWORLD LTD. BESIDES ` 25 LAKHS TOWARDS SHARE APPLICATION MONEY. THE ASSESSEE EXPLAINED BEFORE THE ASSESSIN G OFFICER THAT SMT. D. MEENAKSHI WAS RECEIVING SALARY INCOME FROM M/S DHEVA INVESTMENTS & FINANCE. THE ASSESSING OFFICER FOUND THAT ALL THE FAMILY MEMBERS IN WHOSE NAMES THE INVESTMENT WAS MADE ARE HAVING VERY MEAGER INCOME AND THE SUBSTANTIAL INCOME IS ONLY FR OM THE ASSESSEE. THE SO CALLED SALARY PAID TO THE FAMILY MEMBERS ARE ONLY APPLICATION OF THE ASSESSEES INCOME AND NOT FOR THE SERVICES REN DERED BY THE FAMILY MEMBERS IN THEIR INDIVIDUAL CAPACITIES. REFERRING TO DISCLOSURE MADE BY THE ASSESSEE UNDER VOLUNTARY DISCLOSURE OF INCO ME SCHEME, 1997(VDIS), THE LD. DR SUBMITTED THAT THE ASSESSE E AND HIS FAMILY MEMBERS STARTED ACQUIRING THE PROPERTIES FROM THE Y EAR 1990. ACCORDING TO THE LD. DR, THE ASSESSEES MOTHER, A RETIRED SUB-REGISTRAR IS HAVING ONLY PENSION INCOME. HOWEVER, SMT. GAND HIMATHI, MOTHER OF THE ASSESSEE DISCLOSED UNDER VDIS CASH INVESTME NT, JEWELLERY ETC TO THE EXTENT OF ` 9,80,869/-. ANOTHER MEMBER OF THE ASSESSEES FAMILY, SMT. KAMALA WHO IS THE SECOND SISTER OF THE ASSESSEE DOES NOT HAVE ANY SUBSTANTIAL INCOME. SMT KAMALAS HUSBAND SHRI G.MOHAN WAS A DEALER IN LOTTERY TICKET AND HE DOES NOT HAVE ANY SUBSTANTIAL IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 5 -: INCOME. THE BROTHER OF THE ASSESSEE SHRI T. JANAR DHANAN IS SAID TO BE LOOKING AFTER M/S DHEVA CHEMICAL INDUSTRIES. TH E OTHER BROTHER OF THE ASSESSEE , SHRI T. THIAGARAJAN IS SAID TO BE LOOKING AFTER WIN TV. SHRI T.K.THIRUVENGADAN, FATHER OF THE ASSESSEE, DO ES NOT HAVE ANY INDEPENDENT SOURCE OF INCOME OF HIS OWN. ACCORDING TO THE LD. DR, THE ASSESSEE CLAIMED BEFORE THE LOWER AUTHORITIES THAT THE INVESTMENT WAS MADE FROM THE JEWELLERY DECLARED BY THE RESPECTIVE FAMILY MEMBERS UNDER VDIS. HOWEVER, NO VOUCHERS OR DOCUMENTARY EV IDENCE FOR SALE OF JEWELLERY WAS PRODUCED BEFORE THE LOWER AUTHORIT IES. REFERRING TO THE JUDGMENT OF THE APEX COURT IN SUMATHI DAYAL VS CIT, 214 ITR 801, THE LD. DR SUBMITTED THAT THE BURDEN LIES ON THE ASSESSEE TO PROVE THAT WHAT IS APPARENT IS NOT THE REAL ONE. IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THE FAMILY MEMBERS HAVE S UBSTANTIAL INCOME FOR MAKING INVESTMENT IN M/S DIKSAAT TRANSWORLD L TD., ACCORDING TO THE LD. DR, THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION TO THE EXTENT OF ` 3,62,14,950/-. HOWEVER, THE CIT(A) FOUND THAT IF T HE INVESTMENT BY FAMILY MEMBERS IN THE SHARE OF THE CO MPANY WAS BOGUS THEN IT WAS FREE TO PROCEED WITH THE FAMILY MEMBERS IN RESPECT OF THE INCOME. THE CIT(A) FURTHER FOUND TH AT THE FAMILY MEMBERS ARE ASSESSED SEPARATELY, THEREFORE, THE INC OME AND ASSET DECLARED UNDER VDIS CANNOT BE IGNORED. THE CIT(A) FURTHER FOUND THAT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 6 -: THE ASSESSEE HIMSELF MADE THE INVESTMENT TO THE EX TENT OF ` 1,62,50,000/-. IN RESPECT OF THE INVESTMENT MADE B Y THE FAMILY MEMBERS TO THE EXTENT OF ` 1,99,64,950/-, THE CIT(A) FOUND THAT THERE WAS DEBIT BALANCE IN THE PROPRIETARY CONCERNS NAMELY, M/S RUKMANI INDUSTRIES AND M/S TELESYSTEMS INTERNATIONA L. THE MONEY WITHDRAWN FROM THESE PROPRIETARY CONCERNS WAS USED FOR MAKING INVESTMENT. AFTER TAKING INTO CONSIDERATION ALL TH E MATERIAL FACTS INCLUDING THE LIABILITY OF THE VIDEOGRAPHERS, INVES TMENT IN EQUITY SHARES, PURCHASE OF PROPERTY AND JEWELLERY, THE EXP ENSES ETC., THE CIT(A) CONFIRMED THE ADDITION OF ` 1,62,50,000/-. HOWEVER, HE DELETED THE ADDITION TO THE EXTENT OF ` 1,99,64,950/-. THE REVENUE FILED APPEAL AGAINST THE DELETION OF ` 1,99,64,950/- AND THE ASSESSEE IS IN APPEAL AGAINST THE CONFIRMATION OF ADDITION O F ` 1,62,50,000/-. ACCORDING TO THE LD. DR, IN THE ABSENCE OF ANY MATE RIAL TO SHOW THAT THE FAMILY MEMBERS HAD ANY INDEPENDENT SOURCE OF IN COME, THE CIT(A) OUGHT TO HAVE SUSTAINED THE ENTIRE ADDITION OF ` 3,62,14,950/-. 4. ON THE CONTRARY, SHRI N. DEVANATHAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS PROPRIETOR OF TWO CONCERNS NAMELY, M/S RUKMANI INDUSTRIES AND M/S TELESYSTEMS INTERNATIONAL. THE ASSESSEE HAS ALSO INTEREST IN M/S DHEV CHEMICA L PRODUCTS PVT. LTD AND M/S R.K.MALL, A PARTNERSHIP CONCERN. ACCORDING TO THE LD. COUNSEL, IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 7 -: THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON 5.12.2002. CONSEQUENT TO THE NOTICE ISSUED U/S 158BC OF THE A CT, THE ASSESSEE FILE RETURN DISCLOSING NIL UNDISCLOSED INCOME. HO WEVER, THE ASSESSING OFFICER MADE SEVERAL ADDITIONS EVEN THOUGH THERE WA S NO SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. REFERRING TO SECTION 158BB OF THE ACT, THE LD. COUNSEL SUBMITTE D THAT UNDER THE SCHEME OF THE INCOME-TAX ACT, 1961, UNDISCLOSED INC OME FOR THE BLOCK PERIOD COULD BE COMPUTED ONLY ON THE BASIS OF MATER IAL FOUND DURING THE COURSE OF SEARCH OPERATION AND INFORMATION WHIC H IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION. 5. REFERRING TO THE FIRST ADDITION MADE BY THE ASSESSI NG OFFICER TOWARDS INVESTMENT IN SHARE CAPITAL BY THE FAMILY M EMBERS OF THE ASSESSEE IN M/S DIKSAAT TRANSWORLD LTD. TO THE EXTE NT OF ` 1,99,64,950/-, THE LD. COUNSEL SUBMITTED THAT NO MA TERIAL WAS FOUND TO ESTABLISH THAT THE ASSESSEE HAS INVESTED ANY FUNDS IN THE SHARE APPLICATION OF THE COMPANY. REFERRING TO THE ASSES SMENT ORDER, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS WITH REGARD TO THE INVESTMENT I N M/S DIKSAAT TRANSWORLD LTD. ON THE DATE OF SEARCH. THE ASSESS EE FILED ALL THE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER. TH E ASSESSING OFFICER IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 8 -: CAME TO THE CONCLUSION THAT THE FAMILY MEMBERS OF T HE ASSESSEE DO NOT HAVE ANY INDEPENDENT SOURCE OF INCOME EVEN THOU GH ALL THE FAMILY MEMBERS OF THE ASSESSEE ARE INDEPENDENTLY ASSESSED . REFERRING TO THE DISCLOSURE MADE BY THE FAMILY MEMBERS UNDER VDI S, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER IGNORE D THE ENTIRE ASSET AND INVESTMENT WHICH WAS DECLARED TO THE DEPARTMENT UNDER THE VDIS. ACCORDING TO THE LD. COUNSEL, THE DISCLOSURE MADE BY THE ASSESSEE AND HIS FAMILY MEMBERS TO THE DEPARTMENT I N RESPECT OF THE INVESTMENT, ASSETS AND JEWELLERY UNDER THE VDIS CAN NOT BE IGNORED WHILE COMPUTING THE UNDISCLOSED INCOME. REFERRING TO THE JUDGMENT OF THE APEX COURT IN SUMATHI DAYAL(SUPRA), THE LD. COU NSEL SUBMITTED THAT THE ENTIRE INVESTMENT WAS MADE BY THE RESPECTI VE FAMILY MEMBERS OF THE ASSESSEE THEREFORE, THE BURDEN OF PROOF IS ON THE REVENUE TO SHOW THAT THE ASSESSEE MADE THE INVESTMENT IN THE NAME OF RESPECTIVE FAMILY MEMBERS. IN THE ABSENCE OF ANY M ATERIAL FOUND DURING THE SEARCH OPERATION, ACCORDING TO THE LD. C OUNSEL, THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION OF ` 3,62,14,950/- INSTEAD OF RESTRICTING THE SAME TO ` 1,99,64,950/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. U NDER THE SCHEME OF IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 9 -: THE INCOME-TAX ACT, 1961, UNDISCLOSED INCOME FOR TH E BLOCK PERIOD HAS TO BE COMPUTED ON THE BASIS OF THE MATERIAL FOUND D URING THE COURSE OF SEARCH OPERATION AND THE INFORMATION WHICH IS RELAT ABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE A SSESSING OFFICER CANNOT GO BEYOND THE MATERIAL FOUND DURING THE COUR SE OF SEARCH OPERATION FOR THE PURPOSE OF COMPUTING THE UNDISCLO SED INCOME FOR THE BLOCK PERIOD IN VIEW OF THE LANGUAGE EMPLOYED BY TH E PARLIAMENT IN SECTION 158BB OF THE ACT. 7. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSING OFFICER OBSERVED THAT L OT OF INFORMATION RELATING TO INVESTMENT MADE IN IMMOVABLE PROPERTIES AND OTHER FINANCIAL TRANSACTIONS CAME TO THE LIGHT DURING THE COURSE OF SEARCH OPERATION. HE HAS NOT REFERRED TO ANY OF THE SEIZE D MATERIAL OR INFORMATION WHICH IS RELATABLE TO SEIZED MATERIAL F OR MAKING THE ADDITION OF ` 3,62,14,950/-. THE ASSESSING OFFICER BASICALLY RE FERRED TO THE ASSESSEES LETTER DATED 10.12.2004 AND 24.12.20 04 FOR MAKING ADDITION OF ` 3,62,14,950/-. THE ASSESSING OFFICER HAS ALSO IGN ORED THE DISCLOSURE MADE BY THE FAMILY MEMBERS OF THE ASSES SEE UNDER THE VDIS. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 10 -: 8. THE ASSESSING OFFICER AFTER REFERRING TO THE STATEM ENT RECORDED FROM THE ASSESSEE U/S 131 OF THE ACT ON 20.12.2004, MUCH AFTER THE SEARCH OPERATION DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, FOUND THAT NO MATERIAL WAS FOUND DURI NG THE COURSE OF SEARCH OPERATION. REFERRING TO THE CLAIM OF THE A SSESSEE THAT THE RELEVANT MATERIAL WAS SEIZED BY VARIOUS OTHER AUTHO RITIES LIKE CBI, CENTRAL EXCISE, SALES TAX ETC. THE ASSESSING OFFICE R FOUND THAT ANY RECOVERY OF INCRIMINATING MATERIAL BY THE INVESTIGA TION AGENCIES HAVE NO RELEVANCE AND DO NOT HELP IN ANY WAY DURING SUBS EQUENT PROCEEDINGS UNLESS A PROPER MAHAZAR WAS DRAWN EVI DENCING THE SEIZURE OF RELEVANT MATERIAL. THE FACT REMAINS THA T DURING THE COURSE OF SEARCH OPERATION U/S 132A OF THE ACT, NO MATERI AL WAS FOUND WITH REGARD TO INVESTMENT MADE EITHER BY THE ASSESSEE O R BY HIS FAMILY MEMBERS IN M/S DIKSAAT TRANSWORLD LTD. THE ENTIRE INFORMATION WAS FURNISHED BY THE ASSESSEE MUCH AFTER THE SEARCH BY LETTER DATED 10.12.2004 AND 22.12.2004. THE INFORMATION FURNISHE D BY THE ASSESSEE MAY BE RELEVANT FOR THE PURPOSE OF COMPUTI NG THE INCOME IN THE REGULAR ASSESSMENT. THE LEGISLATURE HAS PRESCR IBED A SPECIFIC METHOD FOR COMPUTING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THEREFORE, THE ASSESSING OFFICER IS BOUND TO FOLLOW THE PROCEDURE PRESCRIBED FOR COMPUTING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 11 -: THE CIT(A) FOUND THAT THE ASSESSING OFFICER HAS FU LLY IGNORED THE DISCLOSURE MADE BY THE RESPECTIVE FAMILY MEMBERS UN DER VDIS. HE FURTHER FOUND THAT THE ADDITION TOWARDS EQUITY SHAR ES AND SHARE APPLICATION MONEY IN THE NAME OF FAMILY MEMBERS CAN NOT BE SUSTAINED. ACCORDINGLY, HE DELETED THE ADDITION TO THE EXTENT OF ` 1,99,64,950/-. THE CIT(A) ALSO FAILED TO CONSIDER THE PROVISIONS OF SECTION 158BB OF THE ACT. THE CIT(A) FURTHER FOUND THAT THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF INVE STMENT IN THE SHARE APPLICATION OF M/S DIKSAAT TRANSWORLD LTD. TO THE E XTENT OF ` 1,62,50,000/-. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY SEIZED MATERIAL DURING THE COURSE OF SEARCH OPERATION, THIS AMOUNT OF ` 1,62,50,000/- ALSO CANNOT BE TREATED AS UNDISCLOSE D INCOME FOR THE BLOCK PERIOD. AT THE BEST, IT MAY B E ASSESSABLE IN THE REGULAR ASSESSMENT PROVIDED THE TIME LIMIT IS AVAIL ABLE UNDER THE STATUTORY PROVISIONS. THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE TOTAL INVESTMENT MADE BY THE ASSESSEE AND HIS FAMILY MEMBERS TO THE EXTENT OF ` 3,62,14,950/- WAS NOT SUPPORTED BY ANY OF THE SEAR CH MATERIAL, THEREFORE, THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. ACCORDINGLY, THE ORDERS OF T HE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ENTIRE ADDITION OF ` 3,62,14,650/-. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 12 -: 9. THE NEXT ISSUE ARISES FOR CONSIDERATION IS UNEXPLA INED INVESTMENT/DEPOSIT IN CITY UNION BANK TO THE EXTENT OF ` 1,49,50,000/-. 10. SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE ASSESSEE DEPOSITED A SUM OF ` 4,64,50,000/- IN CASH BETWEEN 30.7.1997 AND 26.3.1998. THE ASSESSEE HAS DEPOSIT ED A SUM OF ` 5,00,000/- IN CASH ON 17.9.1998. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT DEPO SIT OF ` 1,69,27,817/- COULD NOT BE EXPLAINED PROPERLY AND A CCORDINGLY, THE SAME WAS TREATED AS UNDISCLOSED INCOME FOR THE BLOC K PERIOD. HOWEVER, THE CIT(A) FOUND THAT THE ASSESSEE HAS WI THDRAWN ` 1,50,00,000/- FROM CITY UNION BANK ON 1.8.1997. TH ERE WAS A DEPOSIT OF ` 1,61,50,000/- SUBSEQUENTLY FROM 5.12.1997 TO 18.12 .1997. THE CIT(A) FOUND THAT THE MONEY WITHDRAWN BY THE ASSES SEE TO THE EXTENT OF ` 1,50,00,000/- WAS UTILIZED FOR MAKING THE DEPOSITS FROM 5.12.1997 TO 18.12.1997. SINCE THE ASSESSEE COULD NOT EXPLA IN THE DEPOSIT TO THE EXTENT OF ` 19,77,817/-, THE CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF ` 19,77,817/-, HOWEVER, DELETED THE ADDITION OF ` 1,49,50,000/-. THE REVENUE HAS FILED APPEAL AGAINS T THE DELETION OF ` 1,49,50,000/-. THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ADDITION OF ` 19,77,817/- CONFIRMED BY THE CIT(A). IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 13 -: 11. ON THE CONTRARY, SHRI N. DEVANATHAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT NO MATERIAL WAS FOUND DURIN G THE COURSE OF SEARCH OPERATION WITH REGARD TO DEPOSITS IN CITY UN ION BANK. THE ASSESSEE HAS WITHDRAWN A SUM OF ` 3,05,00,000/- DURING THE FINANCIAL YEAR 1997-98 AND ANOTHER SUM OF ` 10,00,000/- ON 7.10.1998. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS RECE IVED ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIE S LTD. THE ABOVE PAYMENT WAS RECEIVED DURING THE FINANCIAL YEARS FRO M 1996-97 TO 1998-99. THIS IS APPARENT FROM THE ASSESSMENT ORDE R AT PARA 2.4 (PAGE 3). THE ASSESSEE EXPLAINED BEFORE THE ASSES SING OFFICER THAT THE MONEY RECEIVED FROM M/S INDIAN TELEPHONE INDUST RIES LTD WAS DEPOSITED IN THE BANK ACCOUNT AND THE SAME WAS WITH DRAWN. THE STAFF OF THE ASSESSEE HAS TAKEN THE MONEY TO VARIOUS OTH ER PLACES TO FIX THE VIDEO CAMERAS TO CARRY OUT THE WORK OF TAKING PHOTO GRAPHS. OUT OF THIS MONEY, A SUM OF ` 2.82 CRORES WAS DEPOSITED BY THE ASSESSEE PERSONALLY. WHEN THE ASSESSEE ADMITTED RECEIPT OF ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. FOR TAKIN G PHOTOGRAPHS OF THE VOTERS TO PREPARE IDENTITY CARD, THE LD. COUNSE L SUBMITTED THAT DEPOSIT OF SUCH MONEY IN THE BANK ACCOUNT CANNOT BE TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICULARLY PAGE 27, THE LD. COUNSEL S UBMITTED THAT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 14 -: MERELY BECAUSE THE ASSESSEE HIRED THE SERVICES OF PHOTOGRAPHERS OF THE NEIGHBOURING STATES, THE ASSESSING OFFICER DOUB TED THE GENUINENESS OF WITHDRAWAL FROM THE BANK ACCOUNT. A CCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS TO MAKE ARRANGEMENT FOR TAKING PHOTOGRAPHS OF THE VOTERS SIMULTANEOUSLY IN SEVERAL PLACES . IN THE ABSENCE OF ANY VIDEOGRAPHERS/PHOTOGRAPHERS IN THE S TATE OF TAMILNADU, THE ASSESSEE HAS TO NECESSARILY HIRE P EOPLE FROM THE NEIGHBOURING STATES LIKE ANDHRA PRADESH, KARNATAKA AND EVEN FROM DELHI. THE LD. COUNSEL SUBMITTED THAT THE ASSESS EE WAS REQUIRED TO HIRE 3000 VIDEOGRAPHERS/PHOTOGRAPHERS AT EVERY POIN T OF TIME TO COMPLETE THE PROJECT. THIS WAS DONE THREE TIMES AN D EVERY TIME THE ASSESSEE ENTERED INTO CONTRACT WITH THESE VIDEOGRA PHERS/ PHOTOGRAPHERS. THE LD. COUNSEL FURTHER SUBMITTED T HAT MERELY BECAUSE THE ASSESSEE WAS NOT MAINTAINING BALANCE SHEET, TH ERE IS NO PRESUMPTION THAT THE ASSESSEE WAS EARNING ANY UNDI SCLOSED INCOME. THE MAIN SOURCE OF INCOME IS FROM M/S INDIAN TELEPH ONE INDUSTRIES LTD. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER FOUND THAT BETWEEN 30.7.1997 AND 26.3.1998 THE AS SESSEE HAS DEPOSITED A SUM OF ` 4,64,50,000/- IN CITY UNION BANK ACCOUNT. THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 15 -: ASSESSING OFFICER ALSO FOUND THAT DURING THE FINANC IAL YEAR 1997-98, THE ASSESSEE HAS WITHDRAWN A SUM OF ` 3,05,00,000/- AND ANOTHER SUM OF ` 10,00,000/- ON 7.10.1998. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT HE WAS AWARDED A CONTRACT TO TAKE PHOTOGRAPHS FOR PREPARING VOTER IDENTITY CARDS FROM THE YEAR 19 96 TO 1999. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE A SSESSING OFFICER FOUND THAT AN AMOUNT OF ` 1,69,27,817/- WAS REMAINED UNEXPLAINED. THE CIT(A) FOUND THAT AN AMOUNT OF ` 1,50,00,000/- WAS WITHDRAWN ON 1.8.1997. A SUM OF ` 1,61,50,000/- WAS SUBSEQUENTLY DEPOSITED DURING THE PERIOD FROM 5.12.1997 TO 18.12.1997. TH E ASSESSEE CLAIMED BEFORE THE CIT(A) THAT THE AMOUNT WITHDRAWN ON 1.8.1997 WAS REDEPOSITED IN THE BANK ACCOUNT. ACCORDINGLY, THE CIT(A) FOUND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE TO THE EXTEN T OF ` 1,49,50,000/- AND THE ASSESSEE COULD NOT EXPLAIN T HE BALANCE OF ` 19,77,817/-. THE FACT REMAINS THAT THE ASSESSEE W AS ENGAGED BY M/S INDIAN TELEPHONE INDUSTRIES LTD. FOR TAKING PHOTOGR APHS TO PREPARE ELECTORAL IDENTITY CARD OF THE CITIZENS. THE ASSE SSEE HAS RECEIVED ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. DURING THE FINANCIAL YEARS 1996-97 TO 1998-99. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY WAY OF LETTER DA TED 17.11.2004. THE ASSESSING OFFICER, IN FACT, REFERRED THIS LETTER AT PAGE 2, PARA 2.4 OF HIS IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 16 -: ORDER. WHEN THE ASSESSEE HAS RECEIVED ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. TOWARDS THE CONTRA CT AWARDED FOR TAKING PHOTOGRAPHS FOR PREPARING ELECTORAL IDENTITY CARDS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE MIG HT HAVE DEPOSITED THE MONEY FROM THE ABOVE SAID AMOUNT RECEIVED FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. IT IS PERTINENT TO NOTE THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION AND WHA T WAS AVAILABLE WITH THE ASSESSING OFFICER IS ONLY THE BANK STATEME NT. THE ASSESSEE HAS EXPLAINED THE RECEIPT OF ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. WHICH WAS NOT DISPUTED BY THE ASSESSING OFFICER. IN THE ABSENCE OF ANY OTHER MATERIAL TO INDICATE TH AT THE ASSESSEE HAS DEPOSITED THE UNDISCLOSED MONEY IN THE BANK ACC OUNT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ENTIRE AMOUNT OF `1,69,27,817/- WAS DEPOSITED FROM THE BUSINESS RECEIPT OF THE ASSESSE E, IN OTHER WORDS, THE MONEY RECEIVED FROM M/S TELEPHONE INDUSTRIES LTD. MOREOVER, AS OBSERVED BY THE CIT(A), THE AMOUNT WITHDRAWN TO THE EXTENT O F ` 1,50,00,000/- IS ALSO AVAILABLE WITH THE ASSESSEE FOR DEPOSITS. THEREFO RE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE DE LETED THE ENTIRE ADDITION INSTEAD OF RESTRICTING THE SAME TO ` 19,77,817/-. ACCORDING, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO DELETE THE ENTIRE ADDITION OF ` 1,69,27,817/-. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 17 -: 13. THE NEXT ISSUE ARISES FOR CONSIDERATION IS UNEXPLAI NED INVESTMENT IN M/S DIMKA PETRO PRODUCTS LTD TO THE E XTENT OF ` 85 LAKHS. 14. SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE ASSESSEE HAS PURCHASED BITUMEN EMULSION P LANT ALONGWITH LAND AND ACCESSORIES, TECHNICAL KNOWHOW, PATENT ETC BY AN AGREEMENT DATED 25.11.2000 FROM M/S IDL INDUSTRIES LTD., HYDE RABAD. ACCORDING TO THE LD. DR, THE PLANT WAS SITUATED AT GHAZIABAD. THE ASSESSEE HAS PAID ` 60 LAKHS ON 1.10.1997 AND ANOTHER SUM OF ` 15 LAKS ON 21.11.1997. THE ASSESSEE HAS PAID ANOTHER SUM OF ` 10 LAKHS ON 11.4.2001. THE ASSESSEE HAS NOT MAINTAINED ANY BO OKS OF ACCOUNT. THE CONSOLIDATED BALANCE SHEET WAS NOT FILED BY THE ASSESSEE. DUE TO IMPROPER MAINTENANCE OF BOOKS OF ACCOUNT, ACCORDING TO THE LD. DR, THE ASSESSING OFFICER MADE THE ADDITION OF ` 85 LAKHS IN RESPECT OF THE INVESTMENT MADE BY THE ASSESSEE IN M/S DIMKA PETRO PRODUCTS LTD. 15. ON THE CONTRARY, SHRI N. DEVANATHAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT M/S DIMKA PETRO PRODUCTS L TD. ENTERED INTO AN AGREEMENT WITH M/S IDL INDUSTRIES LTD. HYDERABAD FOR PURCHASE OF LICENCED LAND FOR A SALE CONSIDERATION OF ` 85 LAKHS. INITIALLY A SUM OF ` 60 LAKHS WAS PAID AS ADVANCE AND THE BALANCE AMOUNT OF ` 25 LAKHS IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 18 -: WAS PAID IN TWO INSTALLMENTS. ACCORDING TO THE LD. COUNSEL, THE ENTIRE PAYMENT WAS MADE BY WAY OF DEMAND DRAFT TO M/S IDL INDUSTRIES LTD. THE ADDITION WAS MADE ONLY ON THE GROUND THAT THE ASSESSEE COULD NOT MAINTAIN THE ACCOUNTS PROPERLY. ACCORDING TO TH E LD. COUNSEL, WHEN THE ASSESSEE EXPLAINED THE SOURCE OF MAKING INVEST MENT AND THE PAYMENTS WERE MADE BY DEMAND DRAFT, THERE IS NO QUE STION OF ANY ADDITION AS UNDISCLOSED INCOME. THE LD. COUNSEL FU RTHER SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEA RCH OPERATION. IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, ACCORDING TO THE LD. COUNSEL, THE ASSESS ING OFFICER CANNOT TREAT THE INVESTMENT AS UNDISCLOSED INCOME OF THE ASSESSEE. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FR OM THE ORDER OF THE CIT(A) IT APPEARS THAT THE DISPUTE IS WITH REGARD T O LAND PURCHASED BY M/S DIMKA PETRO PRODUCTS LTD FROM M/S IDL INDUSTRIE S LTD., HYDERABAD. THE ASSESSEE HAS NOT PURCHASED ANY LAN D. THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND DEM AND DRAFT. IN FACT, THE PAYMENTS WERE MADE FROM THE ACCOUNTS O F THE MAINTAINED AT CITY UNION BANK AND LAKSHMI VILAS BANK. THE DEP OSIT MADE IN THE ACCOUNT WAS ALREADY CONSIDERED AND IT WAS FOUND THA T THE SAME WAS MADE FROM THE BUSINESS RECEIPT OF THE ASSESSEE. TH EREFORE, THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 19 -: CIT(A) FOUND THAT MAKING A FURTHER ADDITION WITH RE GARD TO PAYMENT MADE BY THE ASSESSEE TO M/S IDL INDUSTRIES LTD WOU LD AMOUNT TO DOUBLE ADDITION. EVEN THE ASSESSING OFFICER HAS MA DE ADDITION ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT MAINTAINED AN Y PROPER ACCOUNTS. THE FACT REMAINS THAT THE DEPOSIT MADE I N THE BANK ACCOUNT WAS EXPLAINED AND THE PAYMENTS WERE MADE FROM THE D EPOSIT MADE IN THE BANK ACCOUNT BY WAY OF DEMAND DRAFTS AND CHEQUE S. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF ` 85 LAKHS. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACC ORDINGLY, THE SAME IS CONFIRMED. 17. THE NEXT GROUND OF APPEAL IS WITH REGARD TO INTERES T PAYMENT TO M/S MANSI MERCANTILE CO. TO THE EXTENT OF ` 1,08,000/-. 18. SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT DURING THE COURSE OF SEARCH OPERATION, A LOOSE SHEET WAS FOUND AND IT WAS IMPOUNDED. IN ONE OF THE LOOSE SHEETS, THE ASSESSEES TRANSACTION WITH M/S MANSI MERCANTILE CO. WAS FOUND . THE ASSESSEE APPARENTLY PAID A SUM OF ` 1,08,000/- TOWARDS INTEREST BETWEEN 24.12.2001 TO 24.3.2001. ACCORDING TO THE LD. DR, THE TRANSACTION AS FOUND IN THE LOOSE SHEET WHICH WAS IMPOUNDED RELATE S TO SUBSEQUENT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 20 -: PERIODS AND THE PAYMENT OF INTEREST OF ` 1,08,000/- WAS FOR THE BLOCK PERIOD. SINCE THE SOURCE OF INTEREST PAYMENT WAS N OT EXPLAINED, THE ASSESSING OFFICER HAS MADE THE ADDITION. 19. ON THE CONTRARY, SHRI N. DEVANATHAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT CLAIM ED ANY INTEREST IN HIS PROFIT & LOSS ACCOUNT. MOREOVER, THE PAYMENT O F INTEREST IS NOT DEBITED IN THE ACCOUNT ALSO. SINCE THE ASSESSEE H AS NOT MADE ANY CLAIM, ACCORDING TO THE LD. COUNSEL, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE LD. COUNSE L FURTHER SUBMITTED THAT THE LOAN WAS RECEIVED FROM M/S MANSI MERCANTIL E CO. THROUGH CHEQUE AND THE INTEREST PAYMENT WAS ALSO MADE THROU GH CHEQUE. THE LD. COUNSEL FURTHER CLARIFIED THAT THE ENTIRE PAYME NT WAS ENTERED IN THE BOOKS OF ACCOUNT BY WAY OF JOURNAL ENTRY. THEREFOR E, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF ` 1,08,000/-. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE LOAN WAS BORROWED THROUGH CHEQUE AND THE PAYMEN T OF INTEREST WAS ALSO MADE THROUGH CHEQUE. M/S MANSI MERCANTILE CO. DEBITED THE INTEREST IN THE ACCOUNT OF THE ASSESSEE ON 24.2.20 01. THE TRANSACTION WAS ENTERED IN THE BOOKS OF ACCOUNT BY WAY OF JOURN AL ENTRY. SINCE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 21 -: THE LOAN WAS RECEIVED BY WAY OF CHEQUE AND THE PAYM ENT OF INTEREST TO THE EXTENT OF ` 1,08,000/- WAS ALSO PAID BY WAY OF CHEQUE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PAYM ENT OF INTEREST TO THE EXTENT OF ` 1,08,000/- CANNOT BE TREATED AS FROM UNDISCLOSED SOURCE OF THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. 21. IN ASSESSEES APPEAL, THE ASSESSEE HAS RAISED A G ROUND WITH REGARD TO ADDITION OF ` 5 LAKHS TOWARDS INVESTMENT MADE IN M/S KARISHMA INVESTMENTS. 22. SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE ASSESSEE IS A PARTNER IN M/S KARISHMA INV ESTMENTS ALONGWITH HIS WIFE SMT. D. MEENAKSHI. FOR THE PURPOSE OF PAR TICIPATING IN THE AUCTION FOR ALLOTMENT OF PARKING SLOT, THE ASSESSE E PAID A SUM OF ` 15 LAKHS BEING THE DEPOSIT WITH CHENNAI METROPOLITAN D EVELOPMENT AUTHORITY(CMDA). THE ASSESSEE HAS PAID A SUM OF ` 5 LAKHS ON 8.3.2000 FROM SAVINGS BANK ACCOUNT WITH CENTRAL BA NK OF INDIA. IN FACT, THE ASSESSING OFFICER FOUND THAT IT WAS NOT P OSSIBLE TO VERIFY THE ENTRIES IN THE INDIVIDUAL BOOKS OF ACCOUNT IN THE A BSENCE OF CONSOLIDATED ACCOUNT OF THE ASSESSEES BUSINESS AC TIVITY. REFERRING TO THE PAYMENT MADE BY THE ASSESSEE TO THE EXTENT OF ` 10 LAKHS ON IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 22 -: 24.6.2000, THE LD. DR SUBMITTED THAT THE PAYMENT WA S CLAIMED TO BE MADE BY M/S DHEVA INVESTMENTS & FINANCE. THE ASSESS ING OFFICER FOUND THAT M/S DHEVA S & FINANCE WAS ENGAGED IN HIR E PURCHASE FINANCE TILL 1996. SINCE THE ASSESSEE HAS NOT MAI NTAINED ANY PROPER ACCOUNTS, THE INVESTMENT MADE COULD NOT BE EXPLAINE D PROPERLY. THEREFORE, THE ASSESSING OFFICER TREATED THE ENTIRE AMOUNT OF ` 15 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. THE CIT(A), HOWEVER, FOUND THAT A SUM OF ` 10 LAKHS WAS PAID FROM M/S DHEVA INVESTMENT & FINANCE. ACCORDINGLY, HE DELETED THE ADDITION. IN RESPECT OF ` 5 LAKHS PAID FROM THE SAVINGS BANK ACCOUNT OF THE ASSESSEE , HE CONFIRMED THE SAME IN THE ABSENCE OF CASH FLOW STATEMENT. 23. ON THE CONTRARY, SHRI DEVANATHAN, LD. COUNSEL SUBMI TTED THAT A SUM OF ` 5 LAKHS WAS PAID FROM THE SAVINGS BANK ACCOUNT OF THE ASSESSEE IN WHICH THE BUSINESS PROCEEDS WERE DEPOSI TED. THE REMAINING ` 10 LAKHS WAS PAID BY M/S DHEV INVESTMENT & FINANCE . WHEN THE CIT(A) FOUND THAT THE MONEY WAS PAID FROM THE SAVINGS BANK ACCOUNT OF THE ASSESSEE, HE OUGHT TO HAVE DEL ETED THE ENTIRE ADDITION OF ` 15 LAKHS. HOWEVER, THE CIT(A) SUSTAINED THE ADDIT ION TO THE EXTENT OF ` 5 LAKHS ONLY ON THE GROUND THAT NO CASH FLOW STATE MENT WAS FILED BY THE ASSESSEE. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 23 -: 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE ASSESSEE WAS A PARTNER IN M/S KARISHMA INVESTMENT W HICH PARTICIPATED IN THE AUCTION OF PARKING SLOT BY DEPOSITING A SUM OF ` 15 LAKHS WITH CMDA. IT IS NOT IN DISPUTE THAT A SUM OF ` 5 LAKHS WAS PAID FROM THE SAVINGS BANK ACCOUNT OF THE ASSESSEE WITH CENTRAL BANK OF INDIA AND ` 10 LAKHS WAS PAID BY M/S DHEV INVESTMENTS & FINANCE . THE CIT(A) DELETED THE ADDITION OF ` 10 LAKHS PAID BY M/S DHEV INVESTMENTS & FINANCE. HOWEVER, HE CONFIRMED THE ADDITION OF ` 5 LAKHS. THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE DEL ETION OF ` 10 LAKHS. HOWEVER, THE ASSESSEE HAS CHALLENGED THE CONFIRMAT ION OF ADDITION OF ` 5 LAKHS. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT WHEN ADMITTEDLY ` 5 LAKHS WAS PAID FROM SAVINGS BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH CENTRAL BANK OF INDIA, THE CIT(A) OUGHT TO HAVE DELETED THE SAME. IN THE ABSENCE OF ANY OTHER MATERIAL TO SHOW THAT THE ASSESSEE HAS EARNED THE MONEY FROM UNDISC LOSED SOURCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION OF ` 15 LAKHS. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DI RECTED TO DELETE THE ADDITION OF ` 5 LAKHS TOWARDS INVESTMENT MADE BY THE ASSESSEE I N M/S KARISHMA INVESTMENT. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 24 -: 25. THE NEXT ISSUE IN ASSESSEES APPEAL IS WITH REGAR D TO CASH PAYMENT TO SHRI RAKESH SARIN AND TRANSACTIONS WITH S/SHRI THIRUNAVUKARASU AND KARTHIKEYAN AND JAYAPRAKASH. 26. SHRI N. DEVANATHAN, LD. COUNSEL SUBMITTED THAT DURI NG THE COURSE OF SEARCH OPERATION AT THE OFFICE OF M/S DIK SAAT TRANSWORLD LTD., THE REVENUE AUTHORITIES FOUND A DIARY. THE ASSESS EES TRANSACTION WITH SHRI RAKESH SARIN BETWEEN 24.4.1996 TO 30.4.19 96 WAS FOUND IN THE DIARY. THE ASSESSING OFFICER ALSO FOUND THAT T HE ASSESSEE HAS PAID A SUM OF ` 10 LAKHS IN CASH ON 27.4.1996. THE ASSESSEE EXPL AINED BEFORE THE ASSESSING OFFICER THAT TRANSACTION WITH SHRI RAKESH SARIN WAS IN RESPECT OF TEMPORARY FINANCING ACTIVITIES. THE ASSESSEE HAS ALSO FILED THE ACCOUNT COPIES OF M/S TELESYSTEMS IN TERNATIONAL AND PARTNERSHIP FIRM M/S FIRE CHALLENGER. REFERRING TO THE ASSESSMENT ORDER, THE LD. COUNSEL SUBMITTED THAT THE ENTRY IS WITH REGARD TO ` 22 LAKHS AND THE ASSESSING OFFICER HAS TAKEN ONLY ` 10 LAKHS ON 27.4.1996. THE ASSESSING OFFICER PRESUMED THAT THE ASSESSEE PAID A SUM OF ` 10 LAKHS BY CASH IN THE ABSENCE OF ENTRY IN THE BO OKS OF ACCOUNT OF M/S TELESYSTEMS INTERNATIONAL. 27. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF SURVEY AT THE OFFICE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 25 -: OF M/S DIKSAAT TRANSWORLD LTD. IT WAS FOUND THAT TH E ASSESSEE HAS PAID A SUM OF ` 10 LAKHS IN CASH ON 27.4.1996. THE ASSESSING OFFI CER FOUND THAT THERE WAS AN ENTRY IN THE CASH BOOK OF M /S TELESYSTEMS INTERNATIONAL FOR PAYMENT OF ` 10 LAKHS ON 27.4.1996. SINCE THE ASSESSEE COULD NOT EXPLAIN THE PAYMENT OF ` 10 LAKHS IN CASH TO SHRI RAKESH SARIN ON 27.4.1996, ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSIN G OFFICER. 28. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTE DLY, THE MATERIAL WAS FOUND AT THE OFFICE OF M/S DIKSAAT TRANSWORLD LTD. DURING THE COURSE OF SURVEY OPERATION. IN FACT, THE ASSESSEE WAS SUBJECTED T O SEARCH U/S 132A OF THE ACT. NO MATERIAL WAS FOUND DURING THE COURSE OF SE ARCH OPERATION WITH REGARD TO INVESTMENT MADE BY THE ASSESSEE OR TRANSACTION MADE BY THE ASSESSEE WITH SHRI RAKESH SARIN. THE QUESTION ARISES FOR CO NSIDERATION IS WHETHER THE MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATIO N CAN BE A BASIS FOR MAKING ADDITION FOR THE BLOCK PERIOD CONSEQUENT TO THE SEA RCH OPERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN VIEW OF SECTION 158BB(1) OF THE ACT, THE ASSESSING OFFICER IS EXPECTED TO CONFINE H IMSELF ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND THE INFORMATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION. THEREFORE, THE MATERIAL SAID TO BE FOUND DURING THE SURVEY OPERATION IN THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 26 -: OFFICE OF M/S DIKSAAT TRANSWORLD LTD. CANNOT BE A B ASIS FOR MAKING ADDITION FOR THE BLOCK PERIOD IN THE HANDS OF THE PRESENT ASSES SEE. A SIMILAR VIEW WAS TAKEN BY JURISDICTIONAL HIGH COURT IN CIT VS G.K.SE NNIAPPAN [2006] 284 ITR 220, AND IN CIT VS P.K.GANESHWAR [2009] 308 ITR 124 . THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION. ACCORDINGLY, THE ORDERS O F THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 10 LAKHS. 29. NOW, COMING TO THE TRANSACTION WITH SHRI THIRUNAVUK ARASU AND SHRI KARTHIKEYAN, THE LD. COUNSEL SUBMITTED THAT THE ASS ESSING OFFICER FOUND THAT THE ASSESSEE ENTERED INTO A TRANSACTION WITH SHRI THIRUNAVUKARASU AND SHRI KARTHIKEYAN TO THE EXTENT OF ` 23,50,000/-. ACCORDING TO THE LD. COUNSEL, THIS TRANSACTION WAS FOUND DURING THE COURSE OF SURVEY O PERATION AT THE OFFICE OF M/S DIKSAAT TRANSWORLD LTD. THE ASSESSEE EXPLAINE D BEFORE THE ASSESSING OFFICER THAT THE TRANSACTION PERIOD RELATES TO JULY AND AUGUST 1996. DURING THAT PERIOD THE ASSESSEE WAS STATE PRESIDENT OF BA HUJAN SAMAJ PARTY AND SHRI THIRUNAVUKARASU WAS ONE OF THE STATE SECRETARIES. THE ASSESSEE FURTHER EXPLAINED BEFORE THE ASSESSING OFFICER THAT THEY US E TO COLLECT MONEY FROM THE PUBLIC FOR PARTY ACTIVITIES. OUT OF THIS, PAYMENTS WERE MADE TO SHRI THIRUNAVUKARASU AND SHRI KARTHIKEYAN DURING THE ABO VE SAID PERIOD. THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 27 -: ASSESSING OFFICER WANTED MATERIAL TO SHOW THAT THE ASSESSEE MOBILIZED FUNDS FROM THE PUBLIC. SINCE THE ASSESSEE HANDED OVER A LL THE BOOKS OF ACCOUNT TO THE SUBSEQUENT INCUMBENT OF THE OFFICE BEARERS, HE WAS NOT IN A POSITION TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER. 30. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DR SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE WAS THAT THE PARTY FUN D WAS PAID TO THE EXTENT OF ` 28,36,000/- TO SHRI THIRUNAVUKARASU IS GENERAL IN NATURE. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE AS SESSEE COLLECTED FUNDS TO THE EXTENT OF ` 28,36,000/- FROM GENERAL PUBLIC OUT OF WHICH ` 23,50,000/- WAS PAID TO SHRI THIRUNAVUKARASU AND SH RI KARTHIKEYAN COULD NOT BE ACCEPTED. IN THE ABSENCE OF ANY MATER IAL, ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE AD DITION MADE BY THE ASSESSING OFFICER. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS STATE PRESIDENT OF BAHUJAN SAMAJ PARTY . IT IS ALSO NOT IN DISPUTE THAT BAHUJAN SAMAJ PARTY IS A NATION AL POLITICAL PARTY. THE POLITICAL PARTY USED TO COLLECT MONEY FROM THE GENERAL PUBLIC BY WAY OF DONATION TO MEET THEIR EXPENDITURE FOR CONTE STING THE ELECTION. THE ASSESSEE BEING THE STATE PRESIDENT OF THE PART Y, WHEN THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 28 -: ASSESSEE CLAIMS THAT HE HANDED OVER ALL THE MATERIA LS TO THE SUBSEQUENT OFFICE BEARERS OF THE PARTY, THE ASSESSI NG OFFICER OUGHT TO HAVE EXAMINED THE SUBSEQUENT OFFICE BEARERS TO FIND OUT WHETHER THE SAID AMOUNT WAS COLLECTED BY THE ASSESSEE ON BEHAL F OF THE PARTY. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL, THE TRANSACTI ON WAS FOUND DURING THE COURSE OF SURVEY OPERATION IN THE OFFICE OF M/S DIKSAAT TRANSWORLD LTD. THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THAT THE MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATION CANNOT BE A BASIS FOR MAKING ADDITION FOR THE BLOCK PERIOD CONSEQUENT TO THE SEARCH U/S 132A OF THE ACT. IN OTHER WORDS, IN VIEW OF SECTIO N 158BB(1) OF THE ACT, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF O NLY TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND HE CANNOT MAKE ADDITION ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATION. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADDITION IS UNWARRANTED. ACCORD INGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSES SING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 28,36,000/- FOR THE BLOCK PERIOD. 32. NOW COMING TO THE TRANSACTION WITH SHRI JAYAPRAKASH , THE LD. COUNSEL SUBMITTED THAT ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SURVEY OPERATION AT THE OFFICE OF M/S DIK SAAT TRANSWORLD LTD. THE ASSESSING OFFICER MADE ADDITION OF ` 5,10,000/-. ACCORDING TO THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 29 -: LD. COUNSEL, THE PAYMENT WAS MADE TOWARDS REIMBURSE MENT OF EXPENDITURE INCURRED BY THE SAID SHRI JAYAPRAKASH O N BEHALF OF THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL FOUND DUR ING THE COURSE OF SEARCH OPERATION, ACCORDING TO THE LD. COUNSEL, THE RE CANNOT BE ANY ADDITION. 33. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DR SUBMITTE D THAT DURING THE COURSE OF SURVEY OPERATION AT THE OFFICE OF M/S DIKSAAT TRANSWORLD LTD. THE REVENUE AUTHORITIES FOUND PAYME NT OF ` 5,10,000/- BY THE ASSESSEE TO ONE SHRI JAYAPRAKASH . THOUGH THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T IT WAS A REIMBURSEMENT OF EXPENSES INCURRED BY SHRI JAYAPRAK ASH, THE COPIES OF THE ACCOUNTS WERE NOT FILED BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF ANY COPY OF ACCOUNTS INDICATING THE SOUR CE AND DETAILS OF PAYMENT, THE CIT(A) CONFIRMED THE ADDITION OF ` 5,10,000/-. 34. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT PAYMENT OF ` 5,10,000/- WAS FOUND BY THE REVENUE AUTHORITIES DU RING THE COURSE OF SURVEY OPERATION IN THE OFFICE OF M/S DIKSAAT TRANSWORLD LTD. NO MATERIAL WAS FOUND DURING THE COURSE OF SEA RCH OPERATION. IN VIEW OF SECTION 158BB(1), THE ASSESSING OFFICER HAS TO COMPUTE THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 30 -: UNDISCLOSED INCOME FOR THE BLOCK PERIOD ON THE BASI S OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND TH E INFORMATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT THE MATERIAL FOUND DURING THE COURSE OF SURVEY OPER ATION CANNOT BE A BASIS FOR MAKING ANY ADDITION. IN VIEW OF THE ABOVE , THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO DELETE THE ADDITION OF ` 5,10,000/-. 35. THE NEXT GROUND OF APPEAL IS WITH REGARD TO PRODUCT ION EXPENSES. 36. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ASSESSEE WAS A PROPRIETOR IN M/S DIMKA PR ODUCTIONS. THE ASSESSEE HAS PRODUCED A TAMIL FEATURE FILM CALLED AAGAYAM. ACCORDING TO THE LD. COUNSEL THOUGH THE ASSESSING O FFICER SAYS THAT THE ASSESSEE IS A PROPRIETOR, THE ASSESSEE NEVER CLAIM ED HIMSELF AS PROPRIETOR. ACCORDING TO THE LD. COUNSEL, THE PROPRIETOR OF M/S DIMKA PRODUCTIONS IS ONE SHRI T. THIAGARAJAN. DURING THE COURSE OF PRODUCTION OF THE FILM, FUNDS WERE TRANSFERRED TO M/S DIMKA PRODU CTIONS. THE LD. COUNSEL FURTHER SUBMITTED THAT M/S DIMKA PRODUCTION S HAS NOW SUBMITTED THE DETAILS OF SOURCE OF FUNDS FOR MAKING INVESTMENT IN THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 31 -: FILM PRODUCTION. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HIMSELF FOUND THAT IN VIEW OF IMPROPER MAINTENANCE OF BOOKS OF ACCOUNT HE COULD NOT RELY UPON THE EXPLANATION OF T HE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS FUR NISHED SUFFICIENT EXPLANATION AND DETAILS WITH REGARD TO PAYMENT MADE TO RESPECTIVE PERSONS AND THE SAME WAS NOT DISPUTED BY THE ASSESS ING OFFICER ALSO. THE LD. COUNSEL FURTHER CLARIFIED THAT AN AGREEMEN T WAS ENTERED INTO WITH M/S SGS CINE ARTS INTERNATIONAL ON 21.3.1998 F OR THE RIGHTS OF THE FEATURE FILMS MUSTAFA , DR. AMBEDKAR AND UDAVU M KARANGAL. IN VIEW OF THE DISPUTE OF THE TRANSACTION A SETTLEMENT WAS ARRIVED AT ON 22.1.1001. IN THE ABSENCE OF ANY MATERIAL, THE CIT (A) CAME TO THE CONCLUSION THAT THE ASSESSEE WAS THE DE FACTO PROPRIETOR OF M/S DIMKA PRODUCTIONS. THIS BEING THE BLOCK ASSESSMENT , ACCORDING TO THE LD. COUNSEL, THERE IS NO QUESTION OF ANY DE FACTO OWNERSHIP IN THE ABSENCE OF ANY MATERIAL. ACCORDING TO THE LD. COUN SEL, THE PROPRIETORSHIP CONCERN OF THE ASSESSEE M/S TELESYS TEMS INTERNATIONAL CONTRIBUTED A SUM OF `9,91,000/-. APART FROM THAT THE ASSESSEE HAS NOTHING TO DO WITH M/S DIMKA PRODUCTIONS. THEREFORE, THE ADDITION OF ` 53,17,300/- IS NOT CALLED FOR. 37. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE CLAIMED THAT HIS BROTHER IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 32 -: SHRI T.THIAGARAJAN WAS PROPRIETOR OF M/S DIMKA PROD UCTIONS. HOWEVER, ON THE STATEMENT RECORDED BY THE REVENUE A UTHORITIES ON 7.10.2003, THE ASSESSEE CATEGORICALLY STATED THAT HE WAS THE PROPRIETOR OF M/S DIMKA PRODUCTIONS. THEREFORE, IT WAS CLEAR THAT THE ASSESSEE IS THE DE FACTO OWNER. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE CONTRIBUTED ` 36,91,600/- DURING THE PERIOD 4.9.1998 TO 25.3.1999. M/S TELESYSTEMS INTERNATIONAL HAS CONTR IBUTED ` 6,76,900/-. ANOTHER SUM OF ` 3,15,000/- WAS RECEIVED FROM ONE SHRI SRIKANTH ON 18.9.1998 AND 3.3.1999. THE ASSESSEE HAS NOT ADMITTED ANY POSITIVE INCOME FOR THE ASSESSMENT YEAR 1999-20 00. SHRI T. THIAGARAJAN FILED HIS RETURN OF INCOME FOR THE ASSE SSMENT YEAR 1998-99 ADMITTING INCOME OF ` 60,000/- ONLY AS SALARY FROM M/S DHEVA INVESTMENT & FINANCE. THEREFORE, SHIR T.THYAGARAJA N HAS NO FINANCIAL CAPACITY TO MAKE INVESTMENT IN FILM PRODUCTION. IN THOSE CIRCUMSTANCES, THE ASSESSING OFFICER, ACCORDING TO THE LD. DR, HAS RIGHTLY TAKEN THE ENTIRE INVESTMENT OF ` 53,17,300/- AS THAT OF THE ASSESSEE. 38. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FR OM THE ORDER OF THE LOWER AUTHORITY, IT APPEARS THAT THE LOOSE SHEET F OUND DURING THE COURSE OF SURVEY OPERATION DISCLOSES THE PAYMENT MA DE TO FILM ARTISTS IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 33 -: AND OTHER EXPENSES INCURRED IN THE PRODUCTION OF FE ATURE FILM. THE TOTAL EXPENDITURE APPEARS TO BE ` 50,25,763.50. THE ASSESSEE HAS ALSO SPENT ANOTHER SUM OF ` 3 LAKHS. THE ASSESSEE HIMSELF ADMITTED DURING EXAMINATION ON 7.10.2003 THAT HE WAS THE PRO PRIETOR OF THE CONCERN. THE CAPITAL ACCOUNT OF M/S DIMKA PRODUCTI ONS SHOWS THAT IS IF THE FUNDS WERE RECEIVED FROM SHRI T. THIAGARAJAN , BROTHER OF THE ASSESSEE. FROM THE ASSESSMENT ORDER IT APPEARS THA T THE ASSESSEE CONTRIBUTED ` 36,91,600/- BETWEEN THE PERIOD 4.9.1998 AND 25.3.1 999. M/S TELESYSTEMS INTERNATIONAL CONTRIBUTED A SUM OF ` 6,76,900/-. ONE SHRI SRIKANTH CONTRIBUTED ` 3,15,000/- ON 18.9.1998 AND 3.3.1999. M/S DHEVA INVESTMENTS & FINANCE CONTRIBUTED ` 3,21,000/- FROM 16.4.1998 TO 26.10.1998. THEREFORE, THE MAIN CONTRIBUTION CO MES FROM EITHER THE ASSESSEES ACCOUNT OR PROPRIETORSHIP CONCERN O F THE ASSESSEE. IN THE EARLIER PART OF THE ORDER, WHILE CONSIDERING TH E DEPOSIT MADE BY THE ASSESSEE IN CITY UNION BANK, THIS TRIBUNAL FOUND TH AT THE ASSESSEE HAS RECEIVED A SUM OF ` 13,40,22,400/- FROM M/S INDIAN TELEPHONE INDUSTRIES LTD. BEING THE BUSINESS RECEIPT FOR THE CONTRACT AWARDED TO HIM FOR TAKING PHOTOGRAPHS FOR PREPARING THE ELECTO RAL IDENTITY CARDS. SO, THIS MONEY IS AVAILABLE WITH THE ASSESSEE IN VA RIOUS FORMS IN VARIOUS ACCOUNTS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE INVESTMENT OF ` 53,17,300/- WOULD HAVE BEEN MADE FROM THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 34 -: ABOVE SAID RECEIPT. IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE ASSESSEE HAS EARNED ANY OTHER INCOME FROM ANY OTHER SOURCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MAKING A DDITION OF ` 53,17,300/- IS NOT CALLED FOR. APART FROM THAT, IN VIEW OF THE JUDGMENTS OF THE MADRAS HIGH COURT IN P.K.GANESHWAR (SUPRA) AND G.K.SENNIAPPAN (SUPRA), IN THE ABSENCE OF ANY MATER IAL FOUND DURING SEARCH OPERATION, NO ADDITION CAN BE MADE TOWARDS U NDISCLOSED INCOME FOR THE BLOCK PERIOD. ACCORDINGLY, THE ORDE RS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 53,17,300/-. 39. NOW COMING TO THE ADDITION OF ` 2,25,000/- TOWARDS TELECAST RIGHTS, THE LD. COUNSEL SUBMITTED THAT THE ASSESSE E HAS RECEIVED ` 2 LAKHS FROM SHRI P.G. SRIKANTH FOR TELECAST RIGHTS. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE PURCHASE OF TELECA ST RIGHTS WAS NOT EXPLAINED PROPERLY. THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF ` 25,000/- TOWARDS PAYMENT FOR THE FILM DR. AMBEDKAR . TOTALLY, THE ASSESSING OFFICER MADE AN ADDITION OF ` 2,25,000/- OUT OF ` 3 LAKHS. ACCORDING TO THE LD. COUNSEL, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. IN FACT, THE ASSESSEE PAID ` 2 LAKHS TO M/S SGS CINE ARTS INTERNATIONAL FOR SATELLITE RIGHTS OF THE FILM MUSTAFA. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 35 -: SIMILARLY, M/S DHEVA FILM INTERNATIONAL HAS ENTERED INTO AGREEMENTS FOR GETTING TELECAST RIGHTS OF THE FILM DR. AMBEDK AR. SINCE THE PAYMENT WAS NOT EVIDENCED BY WAY OF SEARCH MATERIAL , ACCORDING TO THE LD. COUNSEL, IT CANNOT BE ADDED FOR THE BLOCK PERIOD. 40. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THOUGH THE ASSESSING OFFICER HAS NOT MADE ANY REFERENCE ABOUT THE SEIZED MATERIAL, WHILE MAKING ADDITION OF ` 3 LAKHS, THE REVENUE AUTHORITIES DURING THE COURSE OF SEARCH OPERATION FOUND A LOOSE SHEET WHICH SHOWS THE PAYME NT MADE FOR PRODUCTION OF FILM AND TELECAST RIGHTS, THEREFORE, THE ASSESSEE HAS TO EXPLAIN THE SOURCE FOR MAKING THE PAYMENT OF ` 3 LAKHS AS CLAIMED. 41. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. NO DOUBT THE REVENUE AUTHORITIES FOUND PAYMENT OF ` 3 LAKHS DURING THE COURSE OF SEARCH OPERATION FOR OBTAINING TELECAST RIGHTS OF TWO FEAT URE FILMS MUSTAFA AND DR.AMBEDKAR. WHILE CONSIDERING THE INVESTMEN T MADE BY THE ASSESSEE IN PRODUCTION OF THE FEATURE FILM, THIS TR IBUNAL FOUND THAT THE ASSESSEE INVESTED THE SAME FROM THE BUSINESS RECEIP TS OF ` 13,40,22,400/- RECEIVED FROM M/S INDIAN TELEPHONE I NDUSTRIES. THE CIT(A) HAS CONFIRMED THE ADDITION ONLY TO THE EXTE NT OF ` 2,25,000/-. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 36 -: THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE MIGHT HAVE INVESTED OUT OF THE BUSINESS RECEIPTS OF ` 13,40,22,400/- FROM INDIAN TELEPHONE INDUSTRIES. THEREFORE, NO ADDITIO N IS CALLED FOR. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND ADDITION OF ` 3 LAKHS IS DELETED. 42. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF ` 1,35,000/- TOWARDS INVESTMENT IN THE JEWELLERY. 43. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION OF ` 1,35,000/- TOWARDS PURCHASE OF JEWELLERY. THE ASSESSEE EXPLAINED BEF ORE THE ASSESSING OFFICER THAT HE DO NOT KNOW THE SOURCE FROM WHICH H E PURCHASED THE JEWELLERY. IN THE ABSENCE OF ANY MATERIAL, THE CIT (A) CONFIRMED THE ADDITION OF ` 1,35,000/-. ACCORDING TO THE LD. COUNSEL, BEING B LOCK ASSESSMENT, IN THE ABSENCE OF ANY SEARCH MATERIAL, THE ASSESSING OFFICER CANNOT MAKE ANY ADDITION. 44. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE REVENUE AUTHORITI ES FOUND TWO BILLS DATED 31.1.1999 FOR PURCHASE OF JEWELLERY DURING SE ARCH OPERATION. ON EXAMINATION, THE ASSESSEE ADMITTED THAT HE PURCHAS ED JEWELLERY BY PAYING CASH AND SOURCE WAS NOT KNOWN. THE ASSESSEE HAS ALSO IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 37 -: CLARIFIED THAT HE PURCHASED LOT OF JEWELLERY DURING THAT PERIOD. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADD ITION. 45. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE REVENUE AUTHORITIES FOUND TWO BILLS FOR PURCHASE OF JEWELLERY TO THE EXTENT OF ` 1,35,000/-. THE ASSESSEE CLAIMS THAT LOT OF JEWE LLERY WAS PURCHASED DURING THAT PERIOD AND HE COULD NOT EXPLA IN THE SOURCE FOR PURCHASING JEWELLERY TO THE EXTENT OF ` 1,35,000/-. SINCE THE ASSESSEE HIMSELF ADMITTED THAT HE COULD NOT EXPLAIN THE SOUR CE FOR PURCHASE OF JEWELLERY TO THE EXTENT OF ` 1,35,000/-, FOR WHICH RECEIPT WAS FOUND DURING SEARCH OPERATION, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ADDITION OF ` 1,35,000/- TOWARDS PURCHASE OF JEWELLERY IS CONFIRM ED. 46. THE NEXT GROUND OF APPEAL IS WITH REGARD TO PURCHAS E OF INDUSTRIAL LAND AT AMBATTUR. 47. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ASSESSING OFFICER MADE AN ADDITION OF ` 10,57,000/- TOWARDS PURCHASE OF PROPERTY AT AMBATTUR. ACCORDING TO THE LD. COUNSEL, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION. THE ASSESSEE FILED CERTAIN DETAILS DURING THE COURSE OF ASSESSMENT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 38 -: PROCEEDINGS. THERE IS NO MENTION ABOUT PURCHASE OF THIS PROPERTY IN THE BALANCE SHEET ALSO. THE PROPERTY WAS PURCHASED DURING 1.4.1996 TO 5.12.2012 OUT OF THE MONEY RECEIVED FROM M/S IND IAN TELEPHONE INDUSTRIES LTD. SINCE NO MATERIAL WAS FOUND TO SUP PORT THE ADDITION MADE BY THE ASSESSING OFFICER, ACCORDING TO THE LD. COUNSEL, THIS AMOUNT CANNOT BE TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 48. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS PUR CHASED A PIECE OF LAND MEASURING 0.76 ACRES IN INDUSTRIAL ESTATE AT A MBATUR. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT HE PAID ` 10,57,000/- OUT OF THE COLLECTION FROM INDIAN TELEP HONE INDUSTRIES LTD. THE ASSESSING OFFICER FURTHER FOUND THAT TAMILNADU INDUSTRIAL DEVELOPMENT CORPORATION ALLOTTED THE VACANT LAND TO THE ASSESSEE AND THE ASSESSEE HAD CONSTRUCTED A BUILDING WHICH WAS USED FOR CARRYING ON SOAP MANUFACTURING ACTIVITY. IN THE ABSENCE OF ANY DETAILS REGARDING THE CONSTRUCTION OF THE PROPERTY, THE ASS ESSING OFFICER FOUND THAT THE ASSESSEE MIGHT HAVE INVESTED ` 10,57,000/- DURING THE BLOCK PERIOD. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, NO MATERIAL IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 39 -: WAS FOUND DURING THE COURSE OF SEARCH OPERATION WIT H REGARD TO PURCHASE OF PROPERTY AT AMBATTUR. SECTION 158BB(1) OF THE ACT CLEARLY SAYS THAT UNLESS AND UNTIL THERE IS A MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION, THERE CANNOT BE ANY UNDISCLOSE D INCOME FOR THE BLOCK PERIOD. THE ASSESSING OFFICER, ON THE BASIS OF THE INFORMATION FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, MADE ADDITION OF ` 10,57,000/-. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADDITION MAY BE MADE IN THE REGULAR COURSE IN THE REGULAR ASSESSMENT. HOWEVER, NO ADDITION COULD BE MADE FOR THE BLOCK PERIOD SINCE IT WAS NOT SUPPORTED BY ANY SEIZED MATERIAL F OUND DURING THE COURSE OF SEARCH OPERATION. IN VIEW OF THE ABOVE, THE ORDERS OF THE LOWER AUTHORITIES ARE ASSET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 10,57,000/-. 50. THE NEXT GROUND OF APPEAL IS WITH REGARD TO INVESTM ENT OF ` 2,08,133/- IN KOTTIVAKKAN PROPERTY. 51. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT ASSESSEES WIFE, SMT.D. MEENAKSHI PURCHASED 1 3.5 CENTRS OF LAND FOR ` 4,50,000/- ON 11.2.1197. OUT OF THIS, SHE SOLD 5. 5 CENTS OF LAND FOR ` 1,50,000/- ON 29.1.2001. SIMILARLY, THE ASSESSEE S SISTER SMT. KAMALA PURCHASED 13.5 CENTS OF LAND FOR ` 4,50,000/- AND SOLD 11 IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 40 -: CENTS OF LAND FOR ` 4 LAKHS ON 23.9.2000. THE ASSESSING OFFICER MADE ADDITION OF ` 10,16,307/- AS UNDISCLOSED INCOME FOR THE BLOCK PE RIOD. ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT S MT. D. MEENAKSHI, WIFE OF THE ASSESSEE HAS TAKEN LOAN OF ` 3 LAKHS FROM LAKSHMI VILAS BANK. REST OF THE AMOUNT WAS PAID OUT OF HER EARNI NGS. THE CIT(A) ALSO FOUND THAT ASSESSEES WIFE DECLARED HER INCOM E UNDER VDIS. THE CIT(A) FOUND THAT BALANCE OF ` 2,08,153/- WAS NOT SATISFACTORILY EXPLAINED. IN RESPECT OF INVESTMENT MADE BY SMT. K AMALA, SISTER OF THE ASSESSEE, THE CIT(A) FOUND THAT SHE WAS STAYIN G SEPARATELY. ACCORDINGLY, IN RESPECT OF INVESTMENT MADE BY THE ASSESSEES WIFE TO THE EXTENT OF ` 2,08.153/- WAS ADDED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 52. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEES SISTE R SMT. KAMALA PURCHASED 13.5 CENTS OF LAND ON 11.12.1997 AND SOLD 11 CENTS OF LAND ON 23.9.2000. THE CLAIM OF THE ASSESSEE THAT HIS SISTER PURCHASED THE PROPERTY BY INVESTING THE SALE PROCEEDS OF GOLD JEW ELLERY IS NOT SUPPORTED BY ANY MATERIAL. THE ASSESSEE HAS WITHD RAWN FUNDS FROM M/S TELESYSTEMS INTERNATIONAL. THEREFORE, THE ASSE SSING OFFICER MADE AN ADDITION OF ` 10,16,307/- FOR THE BLOCK PERIOD. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 41 -: 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERA TION WITH REGARD TO PURCHASE OF PROPERTY AT KOTTIVAKKAM. APART FROM TH AT, SMT. D. MEENAKSHI, ASSESSEES WIFE IS ALSO AN INDEPENDENT ASSESSEE. IF AT ALL, THE ASSESSEES WIFE COULD NOT EXPLAIN THE SOURCE OF MAKING INVESTMENT, ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSE ES WIFE AND DEFINITELY NOT IN THE HANDS OF THE ASSESSEE. SIMIL ARLY, SMT. KAMALA COULD NOT EXPLAIN THE SOURCE FOR PURCHASING THE PR OPERTY, ADDITION HAS TO BE MADE IN THE HANDS OF THE ABOVE SAID SMT. KAMA LA. IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RE CANNOT BE ANY ADDITION FOR THE BLOCK PERIOD AS UNDISCLOSED INCOME IN VIEW OF THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN SECTION 158 BB(1) OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION OF ` 10,16,307/-. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ENTIRE ADDITION OF ` 10,16,307/-. 54. THE NEXT ISSUE IS WITH REGARD TO INVESTMENT MADE IN THE NAME OF CHILDREN. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 42 -: 55. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 1,54,500/- BEING THE FIXED DEPOSIT STANDS IN THE NAME OF THE CHILDREN AN D SHARES IN THE NAME OF THE CHILDREN. THE ASSESSING OFFICER, WITHO UT ANY DISCUSSION IN THE ASSESSMENT ORDER, MADE ADDITION OF ` 1,54,500/- ON THE GROUND THAT THE SAME WAS NOT DISCLOSED IN THE REGULAR ASSE SSMENT. ACCORDING THE LD. COUNSEL, NO MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH OPERATION. IN THE ABSENCE OF ANY SEARCH MATERIAL, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION FOR THE BLOC K PERIOD. 56. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 1,54,500/- TOWARDS FIXED DEPOSIT AND INVESTMENT IN SHARES OF CITY UNION BANK, VIJAYA BANK ETC. SINCE THE INVESTMENT IN THE FIXED DEPOSIT AND SHARES WERE NOT DISCLOSED IN THE REGULAR COURSE , THE ASSESSING OFFICER HAS TAKEN THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. THE ASSESSEE MADE AN ATTEMPT TO EXPLAIN BEFORE THE CIT(A) THAT THE CHILDREN RECEIVED GIFTS. HOWEV ER, IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE CLAIM OF RECEIPT OF GIF TS, THE CIT(A) CONFIRMED THE ADDITION. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 43 -: 57. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS TO COMPUTE THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD U/S 158BB(1) OF THE ACT. IN OTHER WORDS, THE ASSESSING OFFICER HAS TO COMPUTE THE UNDISCLOSED INCOME ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND THE INFOR MATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION. THE ASSESSING OFFICER IS NOT REFERRING TO ANY OF TH E SEARCH MATERIAL IN THE ASSESSMENT ORDER. IT IS ALSO NOT THE CASE OF TH E REVENUE THAT ANY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE SAME CANNOT BE TAKEN AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF ` 1,54,500/-. 58. IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T.(SS)A.NO.18/MDS/2013 IS DISMISSED AND THE APPEA L OF THE ASSESSEE IN I.T.(SS)A.NO.19/MDS/2013 IS PARTLY ALLO WED. 59. NOW, COMING TO THE REGULAR ASSESSMENT FOR THE ASSES SMENT YEAR 2000-01. BOTH ASSESSEE AND REVENUE FILED APP EAL AGAINST THE VERY SAME ORDER OF THE CIT(A). IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 44 -: 60. SHRI A.V.SREEKANTH, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 1,25,00,000/- TOWARDS UNEXPLAINED EXPENDITURE FOR TAKING PHOTOGRA PHS. ACCORDING TO THE LD. DR, THE ASSESSEE WAS FOLLOWING PROJECT COM PLETION METHOD. THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOU NT, THEREFORE, THE EXPENDITURE CLAIMED BY THE ASSESSEE COULD NOT BE V ERIFIED. IN RESPECT OF M/S RUKMANI INDUSTRIES AND M/S TELESYSTEM INTERN ATIONAL, THE ASSESSEE CLAIMED AN EXPENDITURE OF ` 4,14,17,166/- AND ` 2,07,95,334/- RESPECTIVELY. THE EXPENDITURE TO THE EXTENT OF ` 28,82,543/- WAS UNVOUCHED IN THE CASE OF M/S RUKMAN I INDUSTRIES. THE AUDITORS COULD NOT VERIFY THE CORRECTNESS AND C OMPLETENESS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE . THEREFORE, THE ASSESSING OFFICER DISALLOWED THE UNVOUCHED EXPENDITURE ON EST IMATION BASIS TO THE EXTENT OF ` 1.25 CRORES. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) RESTRICTED THE PHOTOGRAPHS EXPENSES AT 8% OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDING TO THE LD. DR, THE CIT(A) OUGHT TO HAVE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER. 61. ON THE CONTRARY, SHRI N. DEVANATHAN, LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ALSO FILE D APPEAL CHALLENGING THE AUTHORITY OF THE ASSESSING OFFICER TO SELECT TH E RETURN FOR SCRUTINY AGAINST THE GUIDELINES ISSUED BY THE CBDT. ACCORDI NG TO THE LD. IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 45 -: COUNSEL, AS PER THE GUIDELINES ISSUED BY THE CBDT, THE ASSESSING OFFICER CANNOT TAKE UP THE CASE FOR SCRUTINY. THE ENTIRE DISALLOWANCE OF ` 1.25 CRORES WAS MADE BY THE ASSESSING OFFICER ON T HE BASIS OF SUSPICION, SURMISES AND PRESUMPTION. THE LD. COUNS EL FURTHER SUBMITTED THAT UNLESS AND UNTIL THE ASSESSEE INCUR RED AN EXPENDITURE OF ` 2,88,25,244/- HE COULD NOT HAVE COMPLETED THE PROJ ECT AT ALL. ACCORDING TO THE LD. COUNSEL, THE CIT(A) OUGHT TO H AVE ALLOWED THE ENTIRE CLAIM OF THE ASSESSEE WITHOUT RESTRICTING T HE SAME TO 8%. 62. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE WAS AWARDED A CONTRACT FROM INDIAN TELEPHO NE INDUSTRIES LTD. FROM THE ORDER OF THE ASSESSING OFFICER IT AP PEARS THAT THE ASSESSEE CLAIMED THAT IT WAS AN ON-GOING PROJECT, T HEREFORE, INCOME HAS TO BE TAXED ON THE BASIS OF PROJECT COMPLETION METHOD. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARE D ` 11,04,120/- AS INCOME FROM M/S RUKMANI INDUSTRIES AND ANOTHER SUM OF ` 13,31,686/- AS INCOME FROM M/S TELESYSTEMS INTERNAT IONAL. ANOTHER SUM OF ` 23,43,217/- WAS RECEIVED IN RESPECT OF M/S RUKMANI INDUSTRIES. THE ASSESSING OFFICER FOUND THAT MAJOR ITY WORK WAS DONE IN ASSESSMENT YEARS 1996-97 AND 1997-98 AS FAR AS M /S TELESYSTEMS INTERNATIONAL IS CONCERNED. THE ASSESSING OFFICER HAS ALSO FOUND THAT IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 46 -: SINCE THE WORK WAS COMPLETED IN ASSESSMENT YEAR 199 9-2000 ITSELF NO AMOUNT WAS RECEIVED FOR THE ASSESSMENT YEAR 2000-01 . THE ASSESSEE HAS CLAIMED ` 2,88,25,244/- AS EXPENDITURE IN THE CASE OF M/S RU KMANI INDUSTRIES. THE ASSESSING OFFICER FOUND THAT VOUCH ERS FOR WHICH EXPENDITURE WAS CLAIMED ARE NOT SUPPORTED BY ANY BA CK PAPERS AND RELEVANT DOCUMENTS FOR VERIFICATION. WHAT WAS AVAI LABLE IS ONLY INTERNAL VOUCHERS. THE ASSESSING OFFICER FAILED TO APPRECIATE THAT ASSESSEE HAS NOT EMPLOYED ANY EMPLOYEE ON MONTHLY B ASIS. THE ASSESSEE THEN AND THERE EMPLOYED PHOTOGRAPHERS AND PAID THE SALARY. IN THOSE CIRCUMSTANCES, PRODUCING VOUCHERS FOR PAYM ENT OF THE SALARY IS NOT PRACTICALLY POSSIBLE. INTERNAL VOUCHERS ARE AVAILABLE ON RECORD. THIS WAS ADMITTED BY THE ASSESSING OFFICER IN THE A SSESSMENT ORDER. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT IT CO ULD NOT BE VERIFIED BY HIM. THE CASE OF THE ASSESSING OFFICER IS THAT THE AUDITORS ARE NOT ABLE TO CERTIFY THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE IS MAINTAINING INTE RNAL VOUCHERS, THE EXPENDITURE CANNOT BE DOUBTED ESPECIALLY IF IT IS V ERIFIABLE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS TO CON SIDER THE NATURE OF THE ASSESSEES BUSINESS AND HOW THE EMPLOYEES ARE PAID. THE CIT(A) RESTRICTED THE DISALLOWANCE OF 8% OF THE TOT AL EXPENDITURE OF IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 47 -: ` 2,88,25,244/-. THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT DISALLOWANCE OF 8% IS VERY HIGH, HOWEVER, DISALLOWA NCE OF 2% OF THE TOTAL CLAIM OF EXPENDITURE WOULD MEET THE ENDS OF J USTICE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED AN D THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE UNEXPLAINED EXP ENDITURE AT 2% OF THE TOTAL EXPENDITURE CLAIMED IN M/S RUKMANI INDUST RIES AT ` 2,88,25,244/-. IN OTHER WORDS, 2% OF ` 2,88,25,244/- SHALL BE TREATED AS UNEXPLAINED EXPENDITURE FOR THE ASSESSM ENT YEAR 2000-01. 63. NOW COMING TO THE CLAIM OF THE ASSESSEE THAT THE A SSESSING OFFICER HAS NO AUTHORITY TO SELECT THE RETURN FOR S CRUTINY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RETURN WAS TA KEN UP FOR SCRUTINY AS PER THE GUIDELINES ISSUED BY THE CDBT. NO INSTR UCTION ISSUED BY THE CBDT WAS VIOLATED, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY TAKEN THE RETURN FOR SCRUTINY ASSESSMENT U/S 143(3) OF T HE ACT. 64. IN THE RESULT, THE APPEAL OF THE REVENUE I.T.A.NO. 1187/MDS/2013 IS DISMISSED AND THE APPEAL OF THE ASSESSEE I.T.A.NO.1022/MDS/2013 IS PARTLY ALLOWED. 65. NOW, COMING TO THE APPEAL OF THE ASSESSEE FOR ASSE SSMENT YEAR 2003-04, SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 13,08,000/- IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 48 -: TOWARDS UNEXPLAINED CASH CREDIT U/S 69A OF THE ACT . ACCORDING TO THE LD. COUNSEL, THE ENTIRE DEPOSITS IN THE BANK WERE M ADE OUT OF THE COLLECTIONS OF SUNDRY DEBTORS, REFUND OF DEPOSIT AN D SALE OF PROPERTY AT PUZHAL. THE EXPLANATION OF THE ASSESSEE, ACCORDIN G TO THE LD. COUNSEL, WAS NOT EVEN CONSIDERED BY THE LOWER AUTHO RITIES. SINCE THE ASSESSEE HAS SUFFICIENT RESOURCES FOR MAKING THE DE POSITS, ACCORDING TO THE LD. COUNSEL, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. 66. ON THE CONTRARY, SHRI A.V.SREEKANTH, LD. DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT A SUM OF ` 13,08,000/- WAS DEPOSITED AT VARIOUS BANKS. THE A SSESSING OFFICER CALLED FOR INFORMATION U/S 133(6) OF THE A CT FROM CANARA BANK, HONGKONG BANK ETC. AFTER PERUSING THE STATEMENTS R ECEIVED FROM THE CANARA BANK AND HONGKONG BANK, THE ASSESSING OFFICE R FOUND A CASH DEPOSIT OF ` 2 LAKHS ON 21.9.2002 AND ANOTHER CASH DEPOSIT OF ` 10 LAKHS ON 2.1.2003 AT CANARA BANK. SIMILARLY, THE ASSESSEE HAS DEPOSITED CASH OF ` 1 LAKH AND ` 8,000/- ON 10.4.2002 AND 24.7.2002 RESPECTIVELY IN HONGKONG BANK. THE ASSESSEE CLAIM ED BEFORE THE ASSESSING OFFICER THAT HE SOLD A PROPERTY ON 11.12. 2002 OUT OF WHICH A SUM OF ` 10 LAKHS WAS DEPOSITED IN CANARA BANK ON 2.1.2003. AFTER PERUSING THE DOCUMENTS, THE AUTHORITIES BELOW FOUND THAT THE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 49 -: ASSESSEE, HIS WIFE AND ONE SHRI N. PRADEEP KUMAR SO LD A PROPERTY AT PUZHAL ON 11.12.2002 FOR A SALE CONSIDERATION OF ` 20 LAKHS TO ONE SHRI N. SETHURAPANDIAN, SHRI S. ARUNACHALAM AND SHRI V. KUMARAVEL. THE CONSIDERATION RECEIVED BY THE ASSESSEE, HIS WIFE A ND SHRI PRADEEP KUMAR WAS ` 6,49,820/-, ` 3,61,011/- AND ` 9,89,169/- RESPECTIVELY. THE ASSESSEE HAS RECEIVED ` 6,49,820/- IN CASH ON 11.12.2002 THEREFORE, THE EXPLANATION OF THE ASSESSEE THAT TH E SAME WAS DEPOSITED ON 2.1.2003 APPEARS TO BE REASONABLE. HE NCE, THE CIT(A) ACCEPTED THE SAME. HOWEVER, IN RESPECT OF THE BALA NCE AMOUNT OF ` 3,50,180/- IN THE ABSENCE OF ANY EXPLANATION, THE C IT(A) HAS CONFIRMED THE SAME. SIMILARLY, IN RESPECT OF THE D EPOSIT OF ` 2 LAKHS IN CANARA BANK, THE CIT(A) HAS ACCEPTED THE EXPLANATIO N OF THE ASSESSEE TO THE EXTENT OF ` 99,500/- OUT OF THE COLLECTION FROM SUNDRY CREDITO RS OF ` 46,100/- , REALIZATION OF LOANS AND ADVANCE AND RE FUND OF DEPOSIT TO THE EXTENT OF ` 3,000/- FROM M/S RUKMANI INDUSTRIES. THE BALANCE OF ` 3,08,000/- WAS CONFIRMED BY THE CIT(A). ACCORDING TO THE LD. DR, THE CIT(A) HAS TAKEN A VERY REASONABLE VIEW AND THE REFORE, NO INTERFERENCE IS CALLED FOR. 67. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 50 -: ADMITTEDLY DEPOSITED ` 13,08,000/- IN TWO BANK ACCOUNTS. A SUM OF ` 2 LAKHS WAS DEPOSITED IN CANARA BANK ON 21.9.2002 A ND ANOTHER SUM OF ` 10 LAKHS ON 2.1.2003. WITH REGARD TO CASH DEPOSIT OF ` 2 LAKHS ON 21.9.2002, THE CIT(A) FOUND THAT THE ASSESSEE DEPO SITED ` 99,500/- FROM SUNDRY DEBTORS COLLECTION OF ` 46,100/-, OUT OF REALIZATION OF LOANS AND ADVANCES AND ANOTHER SUM OF ` 3000/- FROM REFUND OF DEPOSITS. THE BALANCE OF ` 3,08,000/- WAS CONFIRMED BY THE CIT(A). THE ASSESSEE COULD NOT SUBSTANTIATE THE DEPOSIT OF ` 3,08,000/- IN CANARA BANK ON 21.9.2002. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE A DDITION OF ` 3,08,000/-. 68. NOW, COMING TO ` 10 LAKHS, THE CIT(A) FOUND THAT THE ASSESSEE HAS RECEIVED A SUM OF ` 6,49,820/- IN CASH ON SALE OF PROPERTY ON 11.12.2002. THE CIT(A) FOUND THAT THE REMAINING BALANCE OR ` 3,50,180/- WAS NOT SUBSTANTIATED. THE FACT REMAIN S THAT THE ASSESSEES WIFE SMT. D. MEENAKSHI ALSO RECEIVED A S UM OF ` 3,61,011/- ON SALE OF THE VERY SAME PROPERTY ON 11.12.2002 AN D SHRI N. PRADEEP KUMAR HAS ALSO RECEIVED A SUM OF ` 9,89,169/-. THE FACT REMAINS THAT THE ASSESSEE, HIS WIFE SMT. D. MEENAKSHI AND SHRI N. PRADEEP KUMAR ARE JOINT HOLDERS OF THE PROPERTY AND THEY HAVE TOT ALLY RECEIVED ` 20 IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 51 -: LAKHS ON SALE OF THE PROPERTY. EVEN THOUGH THE AS SESSEE APPEARS TO HAVE RECEIVED ` 6,49,820/- THE POSSIBILITY OF MAKING USE OF THE MO NEY WHICH WAS RECEIVED BY HIS WIFE AND SHRI PRADEEP KUM AR FOR MAKING DEPOSIT IN CANARA BANK CANNOT BE RULED OUT. WHEN T HE ASSESSEE HAS ESTABLISHED THAT THE PROPERTY WAS SOLD FOR ` 20 LAKHS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE AMOUNT MIGHT HAV E BEEN USED FOR MAKING DEPOSIT IN CANARA BANK ON 2.1.2003. THEREFO RE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION OF ` 10 LAKHS. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 10,00,000/- IN RESPECT OF DEPOSIT IN CANARA BANK ON 2.1.2003 IS DELETED. 69. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.T.A.NO. 1612/MDS/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI / DATED: 14 TH AUGUST, 2015 RD IT(SS)A NOS.18 & 19/13 ITA NOS.1022,1187 & 1612/13 :- 52 -: !' / COPY TO: 1 . ! #$% / APPELLANT 4. & & ' / CIT 2. (&$% / RESPONDENT 5. )*#& +, / DR 3. & & ' (! #) / CIT(A) 6. *./ 0 / GF