ACIT, Circle, V. Subhash Chandra,

ITSSA 298/DEL/2004

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0631 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-02-2015
• Assessment Year: misc
• Appeal Filed On: 17-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Assessee Lawyers: V K TULSIAN; HEMANT ARORA
• Keywords: Gift; Search and seizure; Loose papers; Document seized; Block assessment; Documents seized
• Section: 145; 132; 142(1)

Judgement Text

IT (SS)A NO. 298/ DEL/ 2004 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T. (SS) A. NO. 298 /DEL/20 04 BLOCK PERIOD 1.4.1989 TO 4.2.2000 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE, HARDWAR D - 29 & 30, INDUSTRIAL AREA, HARDWAR VS . SH. SUBHASH CHANDRA, 35, ADARSH NAGAR, RISHIKHESH, HARDWAR (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. RAMESH CHANDRA, CIT(DR) ASSESSEE BY : SH. V.K. TULSIAN, FCA & SH. HEMANT ARORA, CA DATE OF HEARING : 12 - 02 - 201 5 DATE OF ORDER : 2 5 - 03 - 201 5 ORDER PER H.S. SIDHU : J M REVENUE HAS FILED THIS APPEAL AGAINST THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - II, DEHRADUN DATED 28 . 5 .20 04 P ERTAINING TO BLOCK PERIOD 1.4.1989 TO 4.2.2000 ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) - II, DEHRADUN HAS ERRED IN LAW IN ACCEPTING THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDGMENT, WHICH DO NOT HAVE APPLICABILITY IN THE CASE OF THE ASSESSEE. 2. THE LD. CIT(A) - II, DEHRA DUN HAS ERRED ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 44,60,881/ - ON ACCOUNT OF PREMIUM OF KEROSENE OIL. IT (SS)A NO. 298/ DEL/ 2004 2 3. THE LD. CIT(A)II, DEHRADUN HAS ERRED ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 25,000/ - 2. THE BRIEF FACTS OF THE CASE ON THE POINT ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE ASSESSEE S AND HIS BROTHER S PREMISES ON 4.2.2000. NOTICE U/S. 158BC OF THE INCOME TAX ACT (HEREINAFTER CALLED THE ACT ) WAS ISSUED TO THE ASSESSEE ON 23.10.2001 FOR THE BLOCK PERI OD WITH EFFECT FROM 1.4.89 TO 4.2.2000. THIS NOTICE WAS SERVED ON 26.10.2011. ON ASSESSEE S REQUEST, THE ASSESSEE WAS ALLOWED TIME FOR FILING OF RETURN TILL 3.12.2001. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 3.12.2011 IN FORM 2B IN WHICH HE DIS CLOSED HIS INCOME (WHICH IS MENTIONED IN AO S ORDER AT PAGE NO. 1). IN THIS CASE THE ASSESSEE IS SOLE PROPRIETOR OF M/S AVINASH OIL COMPANY WHICH HOLDS THE DISTRIBUTORSHIP OF KEROSENE OIL. NOTICES U/S. 143(2) AND U/S. 142(1) WERE ISSUED TO ASSESSEE ON 4.12.2011. ANOTHER NOTICE U/S. 142(1) WAS ISSUED ON 28.12.2001. IN R ESPONSE TO THREE NOTICES AND VARIOUS OTHER NOTICES ISSUED FROM TIME TO TIME, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEEDINGS AND MADE VARIOUS SUBMISSION S, IN RESPONSE TO THE ABOVE NOTICES AND ALSO THE QUERIES RAISED IN THE ORDER SHEE T FROM TIME TO TIME. THEREAFTER, LD. AO MADE VARIOUS ADDITIONS INCLUDING THE ADDITION IN DISPUTE AND COMPLETED THE ASSESSMENT U/S. 158BC OF THE ACT, VIDE HIS ORDER DATED 26.2.2002 FOR THE BLOCK PERIOD 1.4.89 TO 4.2.2000. 3. BEING AGGRIEVED WITH THE ASSES SMENT ORDER DATED 26 . 2 .200 2 , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 28 . 5 .20 04 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE AFORESAID ORDER DATED 28.5.2004, THE REVENUE IS AGGRIEVED AND FILED THE PRESENT A PPEAL BEFORE THE TRIBUNAL. IT (SS)A NO. 298/ DEL/ 2004 3 5. SHRI RAMESH CHANDRA, LD. CIT(DR) RELIED UPON THE ORDERS PASSED BY THE AO AND STATED THAT THE LD. CIT(A) HAS WRONGLY RELIED UPON BY THE JUDGMENTS CITED BY THE ASSESSEE AND DELETED THE ADDITION IN DISPUTE WHICH IS CONTRA RY TO THE LAW AND FACTS OF THE CASE, THEREFORE, THE IMPUGNED ORDER DESERVE TO BE CANCELLED. HE FURTHER STATED THAT IN THE SEARCH AND SEIZURE PROCEEDINGS VARIOUS DOCUMENTARY EVIDENCES WERE SEIZED FROM THE PREMISES OF THE ASSESSEE WHICH ARE VERY MUCH REL EVANT TO THE ADDITIONS IN DISPUTE AND ARE UN EXPLAINED. IN SPITE OF THE SE FACT S , THE LD. CIT(A) HAS DELETED THE ADDITION IN DISPUTE WHICH CONTRARY TO THE EVIDENCE ON RECORD. HE FURTHER STATED THAT ON THE BASIS OF THE DISCREPANCIES, THE AO DRAW THE INFE RENCE THAT THE ASSESSEE WAS DOCTORING THE ACCOUNTS AND OTHER RECORDS AS PER HIS CONVENIENCE. THE AO HELD THAT IT CAN NOT BE CONCLUDED BEYOND DOUBT THAT OIL HAD BEEN SOLD AT PREMIUM AND NOT AT THE DESTINATION AS PER QUOTA. BUT THE DISCREPANCIES DEFINITELY INDICATED THAT THE MAINTENANCE OF ACCOUNTS WAS NOT PROPER AND VARIOUS PERSONS / EMPLOYEES OF THE ASSESSEE APPEARED TO BE MAINTAININ G RECORDS OF OIL MOVEMENT AT THEIR WILL AND THE RECORDS ARE MAINTAINED JUST TO SATISFY THE INSPECTING AUTHORITIES BEFORE WHOM THE COOKED UP RECORDS ARE PRODUCED. THE LD. DR FINALLY STATED THAT THE AO HAS MADE THE ADDITIONS IN IT (SS)A NO. 298/ DEL/ 2004 4 DISPUTE ON THE BASIS OF THE SEIZED MATERIAL FOUND DURING SEARCH AND SEIZURE ON 4.2.2000 AS THE PREMISES OF KUMAR OILS SHARANPUR AND SHYAM LAL BALA PRASAD RISHIKESH ON THE BASIS OF LOOSE PAPERS / DOCUMENTS SEIZED FROM THE PREMISES OF M/S KUMAR OIL SAHARANPUR AND SHYAM LAL BALA PRASA D RISHIKESH. THE AO WORKED OUT THE AMOUNT OF PREMIUM RECEIVED BY THE ASSESSEE AS RS. 29,14,029/ - FROM M/S KUMAR OILS AND RS. 26,62,075/ - FROM M/S SHYAM LAL BALA PRASAD. BESIDES, THIS THE AO ALSO WORKED OUT PREMIUM AT RS. 1,25,000/ - ON THE BASIS OF THE CA SH MEMO AGAINST THE SALES AND SEIZED FROM THE ASSESSEE S PREMISES. AFTER ALLOWING THE DEDUCTION @20% ON ACCOUNT OF TRANSPORTATION, ESTABLISHMENT AND OTHER INCIDENTAL EXPENSES ON ESTIMATE BASIS. THE UNDISCLOSED INCOME FOR VARIOUS ASSTT. YEARS FROM PREMIU M WAS COMPUTING AT RS. 45,60,881/ - . HE REQUESTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) MAY BE CANCELLED AND THE ASSESSMENT ORDER MAY BE UPHELD. 6. LD. COUNSELS OF THE ASSESSEE SHRI V.K. TULSIAN, FCA & SHRI HEMANT ARORA, CA CONTROVERTED THE ARGUMENTS ADVANCED BY THE LD. CIT(DR) AND RELIED UPON THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). LD. COUNSEL OF THE ASSESSEE FILED THE WRITTEN SUBMISSIONS IN THE FORM OF SYNOPSIS AS WELL AS THE TWO PAPER BOOK S ONE CONTAINING PAGES 27 TO 94 HAVI NG THE DETAILS OF REMAND REPORT; NOTICE U/S 14(1); STATEMENT U/132(4) AND IT (SS)A NO. 298/ DEL/ 2004 5 ANOTHER PAPER BOOK CONTAINING PAGES 1 TO 100 HAVING THE COPY OF SUBMISSIONS BEFORE THE CIT(A); COPY OF ASSESSMENT ORDER; REMAND REPORT ETC. LD. COUNSEL OF THE ASSESSEE STATED THA T IN VIEW OF THE WRITTEN SUBMISSIONS AND OTHER DOCUMENTARY EVIDENCES FILED BY HIM IN THE SHAPE OF PAPER BOOK, MAY BE CONSIDERED AND APPEAL FILED BY THE REVENUE MAY BE DISMISSED. FOR THE SAKE OF CONVENIENCE, WE HEREBY REPRODUCE THE SYNOPSIS AS UNDER: - INITIALLY THERE WAS ACTION U/S 132 ON 25.11.1998 UPON THIRD PARTIES LIKE KUMAR OIL AND M /S SHYAM L AL B AL A BOTH WERE IN THE BUSINESS OF TRANSPORTERS ON THE ROLL OF IOC AS WELL AS DEALER IN KEROSIN O IL, WHICH WAS CONTROLLED BY STATE GOVT. THERE WAS NEITHER DIRECT EVIDENCE IN THE FORM OF ALLEGED PREMIUM PAID AND ACK.NOR THROUGH THE STATEMENT U/S132( 4) COLLECTED FROM THE PREMISES OF M /S KUMAR OIL AND M/ S SH YAM LAL P RASAD AS IS APPARENT FROM ENTIRE STATEMENTS U/S 132(4} RECORDED 0 5.02.2000 A S IS APPEAR ED ON P.B.NO AS WELL AS IN THE BODY OF ASSESSMENT ORDER. THE RESPONDENT WAS SUBJECT TO A SEARCH OPERATION ON HIS BUSINESS P REMISES ON 04.02.02 .AII THE SEIZED DOCUMENTS ETC. PROPERLY EXPLAINED AND THERE WAS NO DOCUMENTS IN CONNECTION WITH THE ALLEGED P R EMIUM. THE RESPONDENT IS A LICEN S E HOLDER/QUOTA - HOLDER OF HILL - AREA OF UTTARKASHI OF TEHRI DISTRICT AND OTHER PLACE WHERE KEROSENE OIL IS A NECESSITY FOR THE GENERAL PUBLIC . SUBSEQUENTLY THE RETURN U/S 158 BC WAS FILED FOR THE BLOCK PERIOD TOTALING R S.21,77,937/ - AND WAS FINALLY, ASSESSED AT AN UNDISCLOSED INCOME OF RS.59,78,685/ - APART FROM THE DISCLOSED INCOME AS PER ITR. AGAINST THE ORDER, THE RESPONDENT CHALLENGED BEFORE THE LD.CIT(A) WHO PARTLY IT (SS)A NO. 298/ DEL/ 2004 6 ALLOWED THE APPEAL AND AGAINST THAT THE DEPARTMENT IS IN APPEAL. IT IS SUBMITTED THAT THE RESPONDENT IS DEALING IN KEROSENE OIL WHICH IS G OVERNED BY THE ESSENTIAL COMMODITIES ACT UNDER THE UP STATE GOVERNMENT. THE KEROSENE OIL IS BEING SUPPLIED BY INDIAN OIL CORPORATION AND SUBSEQUENTLY IT IS SUPPLIED TO TH E DEALERS/SHOP - HOLDER IN PURSUANCE OF THE DIRECTIONS TO THE DISTRICT SUPPLY OFFICER AND THE DISTRICT AUTHORITIES (LIKE COMMISSIONER, DISTRICT MAGISTRATE, SDM, SDO ) . THE MAIN ALLEGATION OF THE DEPARTMENT, IF PRIME FACIE ACCEPTED, THEN WAS THERE ANY OCCASIO N EITHER DURING THE SEARCH NO SEIZURE OF ANY SLIP. BOOK , CHEQUE BOOK, BANK STATEMENT / ANY OTHER RELATED DOCUMENTS RELATING TO THE ALLEGA TION. IT IS ALSO VERY SURPRISING THAT IF THE PERSON WHO, AS ALLEGED, IS DEA L ING AS A B IG DEALER THEN AT LEAST SOMETHIN G SHOULD HAVE BEEN FOUND OR SEIZED FROM TILE RESPONDENT BUT NOTHING WAS FOUND OR SEIZED. T HIS WAS PROPERLY ARGUE D BEFORE THE LD. CIT (A) VIDE AR'S LETTER DATED WAS MENTIONED IN PB NO. IN PURSUANCE OF THIS CONTENTION, THE DISTRICT SUPPLY OFFICER HAS GIVEN A CERTIFICATE THAT THERE IS NO VIOLATION FOR WHICH THE LICENSE WAS GRANTED AS APPEARS IN PB NO. 10 TO 15. DURING WING SEARCH OPERATIONS NOT A SINGLE PIECE OF EVIDENCE WAS FOUND OR SEIZED WHICH SUGGESTS THAT THE RESPONDENT IS DOING ANY ILLEGAL TRANSACTIONS OR SELLING GOODS AT A PR EMI UM . ALL THE ALLEGATIONS ARE JUST BASED UPON A SEARCH THAT TOO K PLACE ON ANOTHER ASSESSEE SOMETIME AGO I.E KUMAR OIL FROM WHOSE POSSESSION A SHEET IN JOTTING AND DOTTING FORM WAS RECOVERED AND ON THAT BASIS THE ASSESSING OFFICE R HAS TREATED THE GOODS SOLD AT A PREMIUM AND THAT PREMIUM INCOME HAS NOT BEEN DISCLOSED TO THE DEPARTMENT. THERE IS NO' CORROBORATIVE EVIDENCE FOUND OR RECOVERED FROM THE PREMISES OF THE RESPONDENT NOR ANY DIRECT EVIDENCE OR ANY CIRCUMSTANTIAL IT (SS)A NO. 298/ DEL/ 2004 7 EVIDENCE TO SUGGEST THAT THE RESPONDENT SOLD GOODS AT A PREMIUM DURING THE STATEMENT, THE APPELLANT WAS ASKED, ABOUT ANNEXURE A - 1 AND THE DIARY. THE APPELLANT CLEARLY EXPLAINED AS APPEARS IN THE ANSWER TO Q.NO. 64, 65 AND 67 ON PB NO.31. THE RESPONDENT IS A LICENSE HOLDER AND THE GOODS ARE BEING SUPPLIED BY I O C THROUGH THEIR OWN TRANSPORTER I.E. CONTRACTOR KUMAR OIL . BASICALLY THESE TWO FIRMS ARE CONTRACTOR FIRMS LIFTING GOODS FROM THE GODOWNS OF L O C AND THEY ARE ALSO IN THE BUSINESS OF KEROSENE OIL AS A QUOTA HOLDE R AND A LICENSE HOLDER . THERE ARE NO SCOPE FOR ANY PREMIUM BECAUSE THIS COMMODITY IS COVERED UNDER THE ESSENTIAL COMMODITIES ACT, REGULARLY MONITORED BY THE VARIOUS GOVT. AUTHORITIES LIKE DM , SDM , SDO . DURING THE ASSESSMENT PROCEEDINGS THE RESPONDENT HAS FILED THE WRITTEN SUBMISSION DT. 28.01.02 SUPPORTED BY THE AFFIDAVITS OF RESPONDENT AND HIS BROTHER AND FEW LICENSE HOLDERS AS APPEARING FROM PB NO. 48 TO 55. THE RESPONDENT HAS ALSO FILED A LETTER TO THE A O . T HE MODES OF OPERANDS BY WAY OF A FLOW CHART AS APPEARS FROM PB NO. 61 & 62, AND CATEGORICALLY MENTIONED IN PB NO. 63 THAT THE ASSESSEE IS A QUOTA HOLDER SINCE 1976 AND NOT EVEN A SINGLE IRREGULARITY WAS FOUND. CERTIFICATE FROM THE CONCERNED AUTHORITIES ARE AVAILABLE AND ATTACHED. IT WAS ALSO M ENTIONED THAT DURING THE SEARCH OPERATION OF THE ASSESSEE, NO CORRESPONDING MATERIAL WAS FOUND WHICH CORRELATES THE ENTRIES FOUND IN THE THIRD PARTIES . ON PB NO. 64 , IT HAS BEEN STATED THAT IF , ANY , TRANSACTION WERE DONE WITH THE ALLEGED THIRD PARTY, THE DEPARTMENT WOULD HAVE FOUND ANY STATEMENT / ACCOUNT OF ALLEGED PARTIES AT HIS PREMISE DURING THE SEARCH. IT WAS FURTHER STATED SINCE THESE TWO ALLEGED PARTIES KNOW AVINASH OIL ARE THE QUOTA HOLDERS AND FOR THEIR OWN CONVENIENCE , THEY HAVE WRITTEN THE NAM E OF IT (SS)A NO. 298/ DEL/ 2004 8 AVINASH OIL (AOL) . BASED UPON THIS THE APEX COURT IN 88 I TR 192 IN THE CASE OF VEGETABLE PRODUCTS, IF TWO VIEWS ARE POSSIBLE THEN THE, FAVOURABLE VIEW IN FAVOUR OF THE ASSESSEE BE GIVEN PREFERENCE . DURING THE RECORDING ON STATEMENT U/S 132 (4) ON 05 .02.2000 AS APPEARS ON HINDI TRANSLATION AS MARKED IN PB NO. 4 & 5. THE ORIGINAL WAS FROM PB NO. 90 TO 94 HAS CLEARLY REVEALS THAT NO QUESTION OR A SINGLE WORD OF PREMIUM HAS BEEN USED OR ASKED FROM THE APPELLANT AND THEY DENIED THE ALLEGED TRANSACTIONS. T HE RESPONDENT BROTHER HAS CLEARLY STATED THAT HE HAS DECLARED UNDER VDIS IN 1997, A SUM OF RS. 40 LACS AND HAS ALSO AGREED TO A FURTHER INCOME OF RS. 30 LACS. THE ALLEGED PARTY KUMAR OIL WHOSE BLOCK ASSESSMENT HAS BEEN COMPLETED AT NIL INCOME U/S 158 BC V IDE ORDER DT. 29.02.2000 AS APPEARS IN PB NO. 23 AN WHICH SUGGEST THAT THERE IS NO ANY ADVERSE VIEW TAKEN BASED UPON THE SEIZED MATERIAL. DURING THE APPELLATE PROCEEDING BEFORE THE C!T(A) THE RESPONDENT FILED A LETTER ALONGWITH A CERTIFICATE OF DSO ALONGW ITH THE DETAILS OF TOTAL PURCHASE AND SALE AS APPEARS FROM PB NOS . 9 TO 15 . THE NOTICE U/S 158 BC AND U/S 142(1)/143(2) DT. 04.12.01 AS APPEARS ON PB NO. 32 AND 33 HAS NOT ALLEGED ANYWHERE THE ALLEGED TRANSACTIONS WITH THE ABOVE TWO F IRMS . BASED ON THEI R OWN FINDING THAT SINCE NO CORR O BORATLNQ EVIDENCE FOUND AND SEIZED THEN WHEN THE ASSESSEE COVERED FOR THE SPECIAL PROVISION FOR ASSESSMENT UNDER CHAPTER XIV - B U / S 158 B (B) ARE ANY SCOPE FOR ADDITIONS BASED UPON ASSUMPTION AND PRESUMPTION. THE ASSESSING OFFICER HAS ACCEPTED THE APPELLATE BOOK VERSION. HE A CCEPTED THE TURNOVER, NP AND GP RATE AND IT (SS)A NO. 298/ DEL/ 2004 9 COMPLETED THE ASSESSMENT U/S 143(3)/157BC WITHOUT REJECTION OF BOOKS OF A/THUS IT IS CLEAR THAT HE HAS ACCEPTED THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE RES PONDENT. DURING THE COURSE OF SEARCH NOT EVEN A WORD HAS BEEN WHISPERED BY THE SEARCH PARTY REGARDING RECEIPT OF PREMIUM TO THE ASSESSEE. IT IS IMPORTANT TO NOTE THAT THE ADDITION ON ACCOUNT OF PREMIUM HAS BEEN MADE ON THE BASIS OF LOOSE PAPERS FOUND FRO M THE PREMISES OF M/S K UMAR OIL AND M /S. SHYA M LAL BALA PRASAD . THE HEIGHT OF THE THING IS THAT NO ALLEGED ADDITION ON ACCOUNT OF PREMIUM HAS BEEN MADE IN THE CASE OF M/S KUMAR OIL. IN WHOSE CASE THE SEARCH WAS CONDUCTED AND ORDER WAS PASSED U/S.158BC. T HEN HOW WHEN THERE IS NO PURCHASE BY M/S KUMAR OIL ON WHAT ACCOUNT THE SAID COMPANY IS GIVING THE PREMIUM ON KEROSENE OIL TO US. IT MAY ALSO BE NOTED THAT M /S.KU MA R OIL HAS CHANGED ITS STAND AND RETRACTED ITS STATEMENTS AT VARIOUS LEVELS AS PER PAGE 12 AND 13 OF THE ASSESSMENT ORDER OF THE APPELLANT. THE LOOSE PAPERS FOUND FROM KUMAR OIL AS PER ANNEXURE 12 AND 13 THE TOTAL QUANTITY IS 430+600= 1030 KILO LITER ,WHEREAS NOTHING HAS BEEN CONSIDERED IN THE HANDS OF M /S KU MAR OIL. THEREFORE THE TESTIMONY OF M /S KU MAR OIL COULD NOT BE SAID TO BE RELIABLE. INDIA IS A DEMOCRATIC COUNTRY AND EVERY CITIZEN OF INDIA HAS THE SAME RIGHT IRRESPECTIVE OF THE FACT WHETHER HE HOLDS HIGHEST OFFICE OR IS THE MAN IS NO MEAN. IN THE CASE OF V.C. SHUKLA AND OTHERS KNOWN AS ' J AIN HAWLA' CASE REPORTED IN (1998) 3 SCC 410 THE HONORABLE SUPREME COURT HAVE HELD THAT LOOSE SHEET OR A DIARY IS NOT A BOOK .IN THE PRELIMINARY INVESTIGATION TAKEN UP BY THE CBI TO DECODE AND COMPREHEND THOSE ENTRIES REVEALED P AYMENTS AMOUNTING TO R S .65.47 CRORES, OUT OF WHICH R S.53.5 CRORES HAD BEEN ILLEGALLY TRANSFERRED FROM ABROAD THROUGH HAWALA CHANNELS, DURING THE YEARS 1988 TO IT (SS)A NO. 298/ DEL/ 2004 10 1991 TO 115 PERSONS INCLUDING POLITICIANS. BETWEEN THE MEMBER OF PARLIAMENT S HRI L AL K RISHNA A DVANI & OTHER WERE PROMINENT PER SONS. WHEN THE APEX COURT OF I NDIA HAS HELD THAT LOOSE PAPER AND DIARY ARE NOT THE BOOKS AND MORE SO WHEN THE PAPERS ARE FOUND AT PREMISES OF THE THIRD PARTY THEN THERE REMAIN NO ROOM FOR ALLEGED ADDITION ON ACCOUNT OF PREMIUM AS MADE BY ASSESSING OFFICER. WHEN ONE HUNDRED AND FIFTEEN PERSONS INCLUDING POLITICIAN AND MEMBERS OF PARLIAMENTS WERE SCOUT FREE WHY NOT THE APPELLANT. THE SYSTEM AND CONTROL OF SELLING THE KEROSENE OIL, WHICH GOVERNED BY THE ESSENTIAL COMMODITIES ACT IS CONTROLLED, WATCHED AND SUP ERVISED BY THE AUTHORITIES : - A. I NDIAN O IL C ORPORATION, THE ONLY SELLER OF KEROSENE OIL. B. DISTRICT SUPPLY OFFICER C. DISTRICT AUTHORITIES LIKE SDM / ADM / COMM. THE DEALER - SHIP IS NO WHERE TAMPERED OR HARMED OR CALLED FOR BY ANY AUTHORITIES FROM THE DA TE OF ITS INCEPTION TILL DATE AS NOTHING CONTRARY OR WRONG HAVE EVER BEEN FOUND BY ANY AUTHORITIES TILL DATE.. IN THE CASE OF M/S KUMAR O IL, WHOSE CASE HAS BEEN BROUGHT ON RECORD T O BE USED AGAINST THE APPELLANT CASE THE LOOSE PAPERS OF ALLEGE GOODS SOLD ON PREMIUM WERE FOUND FROM HIS PREMISES . T HE ASSESSMENT HAS ALREADY BEEN FINALIZED BY ACCEPTIN G ITS RETURN INCOME AT NIL U/S.1 5 8 BE VIDE ORDER - DATED 29.2.2000 AND IS PLACE ON RECORD . T HE DEPARTMENT HAS NO ROOM TO MAKE THE ADDITION IN CASE OF AN APPELLANT WHEN THE CASE OF KU MAR O IL IS ACCEPTED. THE QUANTITY RECEIVED AND SUPPLIED TO AUTHORIZED RATION DEALERS AS PER DIRECTIONS OF DISTRICT SUPPLY AUTHORITIES, WHO HAVE ENDORSED THE FIGURES BY GIVING THE CERTIFIED DETAILS OF RECEIPT AND SUPPLY AS PER THEIR REC ORDS WHICH TALLY WITH THE IT (SS)A NO. 298/ DEL/ 2004 11 RECORDS OF THE APPELLANT AND NOTHING ADVERSE HAVE BEEN FOUND DURING THE COURSE OF THE ASSESSMENT PROCEEDING NOR DURING THE COURSE OF REMAND REPORT THEREFORE, NO ADDITION IS CALLED FO R. THE CUMULATIVE EFFECT OF THE ABOVE FACTS REVEALS THAT ASSUMPTION OF PREMIUM WITHOUT ANY SEIZED MATERIALS OR ANY OTHER EVIDENCE SUGGEST FOR ASSUMPTION OR IN ANY MANNER ANY ASSETS FOUND TO THE EXTENT OF THE INCOME CALCULATED BY THE DEPARTMENT PARTICULARLY WHEN THE ASSESSMENT FRAMED UNDER CHAPTER XI V - B. THE LAW IS VERY CLEAR THAT UNDISCLOSED INCOME FOR THE BLOCK PERIOD SHOULD BE SEC.1 5 8 BB (1) LE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AND SUCH OTHER MATERIAL AS ARE AVAILABLE WITH THE AO AND RELATABLE TO SUCH EVIDENCE .THE CASE DOES NOT FALL IN THE ABOVE FRAMEWORK OF THE LAW. THERE ARE A CATENA OF AUTHORITIES WHICH ARE BEING GIVEN AFTER ALL THE GROUNDS. THEREFORE , THE ADDITIONS ARE LIABLE TO BE QUASHED/DELETED BECAUSE NOT ONLY ON THE ABOVE SUBMISSION BUT UNDER THE CONSTITUTIONAL PROVISIO N THAT NO NOTIONAL OR FICTIONAL INCOME BEING BROUGHT ON TAX CONTRARY TO THE STRICT PROVISION OF 265 ARTICLE &ENTRY 82 IN THE LIST OF THE SEVENTH SCHEDULE THESE TO WHICH DEALS 'TAXES ON INCOME OTHER THEN AGRICULTU R AL I NCOME'' . THIS ASPECT WAS VERY WELL EXAM INED BY THE APEX COURT IN THE CASE OF K.P. VERGHIS 131 ITR597 AND IN THE CASE OF LAL C HAND B HAGAT 37 ITR288(SC) SHIVA KAMI CO.159 ITR71 WHERE THEIR LORDSHIP DISAPPROVED THE SYSTEM OF MAKING ADDITIONS IN THE ASSESSMENT ON MERE SUSPICION AND SURMISES. PRECE DENTS RELIED UPON THE HON'BLE SUPREME COURT IN PURSHOTTAM POTTERIES 106 ITR 1 THEIR LORDSHIPS HAVE HELD THAT THE DEPARTMENT CAN COLLECT THE LEGITIMATE TAX AS PER THE ACT AND NOT IN AN ARBITRARY, MECHANICAL WAY. IT (SS)A NO. 298/ DEL/ 2004 12 IT IS SETTLED LAW THAT A STATUTE MUST BE CO NST R UED AS PER THE PLAIN MEANING OF THE LANGUAGE. IN THE CASE OF POLESTAR ELECTRONIC P. LTD. VS. ADDL . CST (1978) 41 STC 409 (SC) ; AIR 1978 SC 897 IT HAS BEEN HELD AS UNDER: 'A STATUTORY ENACTMENT MUST ORDINARILY BE CONSTRUED ACCORDING TO THE PLAIN NATURAL MEANING OF ITS LANGUAGE AND THAT NO WORDS SHOULD BE ADDED, ALTERED OR MODIFIED UNLESS IT IS PLAINLY NECESSARY TO DO SO IN ORDER TO PREVENT A PROVISION FROM BEING UNINTELLIGI BLE, ABSURD, UNREASONABLE, UNWORKABLE OR TOTALLY IRRECONCILABLE WITH THE REST OF THE STATUTE.' THE HON'BLE SUPREME COURT IN THE CASE OF UMA CHARAN SHAH 37 ITR 271,277 WHERE THEIR LORDSHIPS WERE PLEASED TO PASS THE ORDER BY SETTING ASIDE THE ORDER OF THE T RIBUNAL, BECAUSE THE ASSESSMENT ORDER WAS BASED ON SURMISES AND CONJECTURES. THE RELEVANT PORTION AT PG.277 IS AS UNDER: - 'TAKING INTO CONSIDERATION THE ENTIRE CIRCUMSTANCES OF THE CASE WE ARE SATISFIED THERE IS NO MATERIAL ON WHICH THE AO COULD COME TO T HE CONCLUSION THAT THE FIRM WAS NOT GENUINE. THERE ARE MANY SURMISES AND CONJECTURES AND THE CONCLUSION WAS A RESULT OF THE SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF IN THESE MATTERS .' IN THE PRESENT CASE THE ADDITIONS WERE MADE BASED UPON SEIZED LO OSE PAPERS FROM THE THIRD PARTIES WITHOUT ANY SINGLE PIECE OF EVIDENCE / ANY ASSETS . THEREFORE , THE ABOVE JUDGMENT IS SQUARELY APPLICABLE IN THE PRESENT CASE BY WHICH BOTH THE ADDITIONS ARE LIABLE TO BE QUASHED'. AS T HE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. S.N. GUPTA (2008) 166 TAX M AN 313 HAS HELD THAT UNDER CHAPTER XIV - B THE TOTAL INCOME COMPRISES OF THE DISCLOSED AND UNDISCLOSED IT (SS)A NO. 298/ DEL/ 2004 13 INCOME AND IT IS SUBJECT TO SEC. 4 OF THE ACT. AS REGARDS THE COMPUTATION OF INCOME U/S 15S BB WHICH DEALS WITH THE C OMPUTAT I ON OF UNDISCLOSED INCOME FOR BLOCK PERIOD IT HAS TO. BE READ WITH COMPUTATION OF TOTAL INCOME UNDER CHAPTER IV OF THE ACT AND ALSO UNDISCLOSED INCOME FOR CHAPTER XIV - B RELATES TO DIFFERENT ACCOUNTING YEARS IN WHICH THE INCOME IS EARNED . THE APEX COURT IN THE CASE OF SARASWATI INDUSTRIAL SYNDICATE 237 ITR 1 . THE DELHI HIGH COURT IN THE CASE OF DK GUPTA 308 ITR 230, 233 HAS HELD THAT IF NO CORROBORATIVE OR DIRECT EVIDENCE TO PRESUME THAT NOTING ORJOTTLNQ HAD MATERIALIZED INTO TRANSACTION, INCOME CA NNOT BE ASSESSED ON THE BASIS OF DUMB DOCUMENTS. DELHI H. C IN THE CASE OF RAVI KANT JAIN 117 TAXMAN 28,33 (PARA 8 & 9) 250 ITR 141 WHERE IT WAS HELD THAT THE SCOPE AND AMBIT OF CHAPTER XIV - B LIMITED TO THE MATERIALS UNEARTHED DURING THE SEARCH DELHI H. C IN THE CASE OF BALAJI WIRES (2007) 164 TAXMAN 559 , 565 (PARA 12) HAS HELD THAT IN THE ABSEN C E OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH / REQUISITION NOTHING IS TO BE CONSIDERED FOR THE PURPOSE OF BLOCK ASSESSMENT UNDER CHAPTER XIV - B. DELHI H. C IN THE CASE OF VISHAL AGGARWAL REPORTED IN 283 ITR 326,328 ALTHOUGH THE JUDGMENT RELATED TO THE ALREADY DISCLOSED GIFT THE RATIO IS SQUARELY APPLICABLE BECAUSE IT WAS HELD THAT POST - SEARCH ENQUIRY WAS UNCONNECTED WITH THE INFORMATION / MATERIAL REC OVERED DURING THE SEARCH) 287 ITR 285 (DELHI HIGH COURT) . IF NO EVIDENCE OF CONCEALMENT OF INCOME IS DISCOVERED , NO ESTIMATION CAN BE MADE BASED UPON 250 ITR 141 AND 276 ITR 563 . IN ANOTHER CASE DELHI HIGH COURT IN 287 ITR 287 HAVE DEFINED THE SCOPE OF CHAPTER XIV - B IF NO INCRIMINATING MATERIAL FOUND ADDITIONS CANNOT BE MADE WHEREIN THE TRIBUNAL IT (SS)A NO. 298/ DEL/ 2004 14 HAS ALSO HELD THAT MERE SILENCE ON THE PART OF THE ASSESSEE WOULD NOT CHANGE THE CHARACTER OF UNDISCLOSED INCOME. THERE ARE NO ASSUMPTIONS AND PRESUMPTIONS A S HELD BY HON'BLE DELHI HIGH COURT AS REPORTED IN 296 ITR619 AND IN ANOTHER CASE 296 ITR 750 . THE DELHI HIGH COURT 299 ITR 429 HAS HELD THAT FOR THE PURPOSE OF 158 BC ESTIMATION OF INCOME BASED ON BLANK & CANCELLED BILL, NOT VALID. IF NO INCRIMINATING M ATERIAL FOUND DURING SEARCH THAT MIGHT SHOW THAT THE ASSESSEE HAD MADE INVESTMENT IN PROPERTY THEN THE DECLARED VALUE ADDITION COULD NOT BE MADE (2008) 166 TAXMAN 75 (DELHI HIGH COURT) HON'BLE MUMBAI HC IN THE CASE OF VINOD DANCHAND (2001) 247 ITR 448 , 44 9. THE RELEVANT PORTION : - CHAPTER XIV B OF THE INCOME TAX ACT ASSUMES PROCEEDINGS ON THE BASIS THAT WHERE AN INVESTMENT IS MADE BY THE ASSESSEE IT IS UNEXPLAINED THEN THE DEPARTMENT IS ENTITLED TO BLOCK ASSESSMENT. IN THE PRESENT CASE NOTHING WAS IN THE HANDS OF THE DEPARTMENT EXCEPT ASSUMPTIONS AND PRESUMPTIONS. IN THE BOMBAY HIGH COURT IN THE CASE M.K.G.MEMON REPORTED IN 112 TAXMAN 96 WHICH MAY WITH RESPECT TO THE SCOPE OF CHAPTER XIV - B BY CONFIRMING THE HON'BLE TRIBUNAL'S JUDGEMENT THAT THERE IS NO ROOM FOR ANY ARBITRARY METHOD FOR ESTIMATING THE INCOME OF THE ASSESSEE UNDER CHAPTER XIV - B. THE DELHI TRIBUNAL IN THE CASE OF RISHABH KUMAR JAIN 63 DJ DELHI 236 IT WAS HELD THAT STATEMENTS U/S 132(4) IS FOR THE LIMITED PURPOSE OF SEEKING EXPLANATIONS / INFORMATION IN RESPECT OF DOCUMENTS , ARTICLES , THINGS FOUND DURING THE SEARCH AND THE .QUESTION BASED BEYOND THAT IS NO STATEMENT AND SINCE THE APPELLANT'S CASE IS FULLY COVERED BECAUSE THE IT (SS)A NO. 298/ DEL/ 2004 15 STATEMENT WAS NOT BASED UPON ANY SEARCH MATERIAL AND SECONDLY. , THE STATEMENTS NEVER SUGGESTED ANY UNDISCLOSED INCOME. MANGE RAM MITTAL DELHI SPECIAL BENCH 103 ITD 389, 489 (PARA - 89) THAT ANY OTHER INFORMATION AS IS AVAILABLE WITH THE AO , RELATABLE TO SUCH EVIDENCE , THE ASSESSMENT CAN BE MADE . IN THE PRESENT CASE WHEN NO EVIDENCE FOUND / SEIZED FROM THE PREMISES OF THE RESP. ABOUT ANY PREMIUM EXCEPT INFORMATION AVAILABLE THROUGH 3RD PARTIES BUT NOWHERE THOSE PARTIES ALLEGED AS REGARDS THE PAYMENT OF PREMIUM, BY WHOM AND TO WHAT EXTENT MADE, MODE NOR ANY SINGLE PIEC E OF EVIDENCE FOUND DURING THE SURVEYOR THE SEARCH .THEREFORE, THE SPECIAL BENCH'S JUDGEMENT (INSTEAD OF HELPING THE DEPARTMENT) WHICH WAS IN FAVOUR OF THE DEPARTMENT IN MANGE RAM'S CASE DOES NOT GO IN ITS FAVOUR IN THE PRESENT CASE AND CIRCUMSTANCES AND THEREFORE THE ADDITIONS WHICH HAS BEEN RIGHTLY DELETED BY CIT(A) TO BE UPHELD. THE DELHI HIGH COURT IN THE CASE OF MOHINDER HARYANVI REPORTED IN 172 TAXMAN 223 HAS HELD THAT IF THE SEIZED DOCUMENT DID NOT MENTION ANY PARTICULAR DATE AND YEAR AND THEREFORE ITS EXISTENCE COULD NOT BE ATTRIBUTED TO THE BLOCK PERIOD UNDER CONSIDERATION AND MOREOVER ON ASKING (FOR) A COMMENT FROM THE AO IN THIS REGARD) AND IF HE KEEPS SILENT ON A (THAT) PARTICULAR ISSUE THEN IT ALSO SHOWS AN ADVERSE REFERENCE AGAINST THE DEPART MENT. THE DELHI HIGH COURT IN THE CASE OF S.M.AGGARWAL 162 TAXMAN 3 ,8 HAS HELD THAT THE ENTRIES IN DUMB DOCUMENTS CANNOT BE CONCLUDED TO REPRESENT THE UNDISCLOSED INCOME. DELHI BENCH IN THE CASE OF PAWAN KUMAR GUPTA 131 DJ (UO) 92. IT WAS HELD THAT THE STATEMENT OF ALLEGED PERSON NOT IT (SS)A NO. 298/ DEL/ 2004 16 PROVIDED NOR ANY CROSS EXAMINATION ADDITIONS ARE LIABLE TO BE DELETED. 3RD MEMBER OF DELHI BENCH IN THE CASE OF AMARJIT SINGH 81 TTJ 169 HAS HELD THAT ADDITION IN THE BLOCK ASSESSMENT SHOULD BE BASED ON DOCUMENTS FOUND AND RECOVERED DURING SEARCH. THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF SUNDER AGENCIES REPORTED IN 63 ITD 245 , MADRAS ITAT IN 65 ITD 183 ,206 AND THE INDORE BENCH IN THE CASE OF INDORE CONSTRUCTION COMPANY 70 ITD 128 WHEREIN THE HON'BLE TRIBUNAL HAS HELD TH AT INCOME FOR THE BLOCK ASSESSMENT IS TO BE COMPUTED STRICTLY ON THE BASIS OF DOCUMENTS SEIZED. IT CANNOT PROCEED ON CONJECTURES, SURMISES AND ARRIVED AT ON THE BASIS OF ESTIMATION INSTEAD OF THE COMPUTATION. THE WORD 'COMPUTATION' CONNOTES A DIFFERENT MEA NING THAN 'ESTIMATION' OR 'APPRAISAL'. COMPUTATION PRE - SUPPOSES A CALCULATION ON THE BASIS OF MATERIAL, WHICH IS SOMETHING DIFFERENT FROM THE ESTIMATION OR APPRAISAL AND IT MUST BE BASED ON THE METHODICAL CALCULATION WITH SOME AMOUNT OF APPROXIMITY TO MATH EMATICAL PROCESS ON THE MATERIAL AVAILABLE FROM SEARCH & SEIZURE. ADMITTEDLY, THE COMPUTATION HAS NOT BEEN DEFINED IN THE A CT . THE MEANING OF THE WORD IS TO BE GATHERED FROM THE SCHEME OF THE ACT HAVING REGARD TO ITS ORDINARY GRAMMATICAL MEANING. THE ACT R EQUIRES THE ASSESSMENT OF THE INCOME OF THE ASSESSEE AND FOR THE PURPOSE OF ASSESSMENT THE INCOME IS TO BE COMPUTED. THE ORDINARY GRAMMATICAL MEANING OF THE WORD 'COMPUTATION' AS GIVEN IN SHORTER OXFORD DICTIONARY, 3RD EDITION, IS: - THE ACTION OR PROCESS OF COMPUTING A METHOD OF RECKONING AND THE WORD 'COMPUTE' MEANS: - CLEAR A SUBTLE (ACCOUNT) RECKON. THE WORD 'COMPUTATION' IS COMPLETELY DISTINCT AND DIFFERENT FROM THE WORD 'ESTIMATE', WHICH MEANS THE ACTION OF VALUING OR APPRAISING AND APPROXIMATE CALCUL ATION BASED ON THE PROBABILITIES. IT (SS)A NO. 298/ DEL/ 2004 17 THE PROVISIONS OF CHAPTER XIV - B FOR THE BLOCK ASSESSMENT MUST BE BASED UPON EVIDENCE FOUND DURING THE SEARCH AND SHOULD NOT BE BASED ON THE EVIDENCE / MATERIAL ALREADY ON RECORD BECAUSE FOR THAT ANOTHER PROVISION CAN BE INVOKED INSTEAD OF SEC.1 5 8 BC. MORARJEE GOCUL DAS SPG. & WEV. CO. LTD. MUMBAI SPECIAL BENCH REPORTED IN 95 IT D L,78 - 79(PARA 86), 85 (PARA93), (UNDISCLOSED INCOME SHOULD BE COMPUTED ON THE BASIS OF EVIDENCE FOUND DURING SEARCH / DIRECT NEXUS WITH THE SEAR CH PROCEEDINGS PG.NO. 78 - 79 PARA 86 HON'BLE MUMBAI TRIBUNAL IN CASE OF SIGMA SECURITIES REPORTED IN 286 ITR 80 , 87,96,99 / - . THE HON'BLE BENCH IS OF THE VIEW THAT THERE SHOULD BE SOME EVIDENCE COLLECTED DURING THE COURSE OF SEARCH EXHIBITING THE FALSITY OF THE CLAIM. IN THE PRESENT CASE NOTHING WAS FOUND OR ANY OTHER INFORMATION CORRELATED WITH THE EVIDENCE GATHERED DURING THE SEARCH. MUMBAI TRIBUNAL C. J SHAH & CO. REPORTED IN 118 TAXMAN MAGAZINE 183,184 IT WAS HELD THAT FOR ASSUMPTION OF THE INCOME AT LE AST SOMETHING BY WAY OF KUCCHA CHITHHA SHOULD BE SEIZED FOR ESTIMATING THE INCOME .IN THE PRESENT CASE NOT A SINGLE PIECE OF EVIDENCE WAS FOUND OR SEIZED TO CORRELATE THE ASSUMPTION PURPORTED TO BE MADE. ACCORDINGLY THE ORDER IS LIABLE TO BE QUASHED. THE MUMBAI BENCH IN THE CASE OF SHAILESH .S.SHAH REPORTED IN 63 ITD 153 THE RATIO OF THE CASE THAT THE ASSESSEE'S INCOME SHOULD BE ON THE BASIS OF DOCUMENTS SEIZED AND THE ONUS IS ON THE DEPARTMENT TO PROVE THAT ALLEGED RECEIPTS WERE ASSESSEE'S INCOME AND THEREFORE THE ADDITION BEING MERELY ON BASIS OF SUSPICION COULD NOT BE SUSTAINED. 3RD MEMBER OF MUMBAI BENCH IN THE CASE OF SP GOYAL 77 TTJ 1 WHERE IT WAS HELD THAT ADDITION OF RS. 60 LACS ON THE BASIS OF IT (SS)A NO. 298/ DEL/ 2004 18 NOTING ON LOOSE SHEETS , DIARY SEIZED AT THE PREMI SES OF THE ASSESSEE WAS NOT JUST . IN THE PRESENT CASE NOT A SINGLE PIECE OF EVIDENCE WAS SEIZED AND ALL THE EVIDENCE WAS SEIZED FROM A THIRD PARTY SEARCH AND FROM WHOM THE JOTTING AND DOTTING SHEET WAS RECOVERED. ON THAT SHEET THERE WAS NO MENTION OF THE ASSESSEE'S NAME BUT ONLY OF THE TRANSPORTERS APPOINTED BY THE IOC FOR SUPPLY OF GOODS TO THE RESPONDENT. T HE ALLAHABAD HIGH COURT IN THE CASE OF SMT. USHA TRIPATI 166 C TR 77 HELD THAT A O WAS NOT JUSTIFIED IN ESTIMATING THE UNDISCLOSED FOR WHICH THERE WERE NO DETAILS IN ANY OF THE SEIZED DOCUMENTS. THE CHANDIGARH BENCH IN THE CASE OF KAPOOR SONS JEWELLERS 119 TAXMAN MAGAZINE 113,115 HELD THAT THE SCHEME OF XIV - B DOES NOT GIVE POWER TO THE REVENUE TO DRAW THE PRESUMPTION IN REGARD TO UNDISCLOSED INCOME. JODHPUR BENCH REPORTED IN (2008) 113 DJ 337 HAS HELD THAT UNDISCLOSED INCOME COULD NOT BE FRAMED FOR BLOCK ASSESSMENT UNLESS ANY DETAILS OR NARRATIONS FOR WRITTEN ON PLAIN PAPER SEIZED DURING SEARCH . IN THE PRESENT APPEAL NOTHING SEIZED/FOUND AND WHATEVER SEIZED HAVE ALREADY BEEN EXPLAINED U/S132(4). THE JAIPUR BENCH OF RAJASTHAN HIGH COURT IN THE CASE OF SH.RAJENDRA PRASAD GUPTA 248 ITR 350 HAS HELD THAT THE ASSESSMENT IS TO BE FRAMED U/S 158 BC ON THE BASIS IN THE LIGHT OF THE MATERIAL THAT HAS COME INT O THE POSSESSION OF THE DEPARTMENT DURING THE COURSE OF SEARCH WHICH IS THE FOUNDATION OF THE PROCEEDING AND THEREAFTER IF THE ASSESSEE IS STILL NOT COMING WITH CLEAN HANDS THEN THE ESTIMATION CAN BE DRAWN WHICH IS ALSO BASED UPON THE SEIZED MATERIAL. IT (SS)A NO. 298/ DEL/ 2004 19 THE LUCKNOW BENCH IN THE CASE OF SMT. SAVITRI DEVI 76 DJ 628 WHERE IT WAS HELD THAT SINCE NO MATERIAL WAS FOUND ADDITION CAN NOT BE MADE IN BLOCK ASSESSMENT CASES . SMT. CHITRA OEVI 77 DJ 614 THE ADDITIONS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING EV IDENCE / MATERIAL FOUND AS A RESULT OF SEARCH NOT OTHERWISE. THE JODHPUR BENCH IN THE CASE OF JRC BHANDARI 79 TTJ 1 HELD THAT ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF LOOSE SHEETS RECOVERED FROM THIRD PARTY WAS NOT LEGALLY SUSTAINABLE. THE P UNE BENCH IN THE CASE OF PARAKH FOODS P. LTD. 64 ITO 396 HAS EXAMINED THE SCOPE OF SEC. 158 B(B) DEFINING UNDISCLOSED INCOME .IN THAT CASE IT WAS HELD IN PARA. 21 THAT DEFINITION CLAUSE IN SEC. 158 B IS IN TWO PARTS. FIRST IS INCLUSIVE ONE WHICH ENLARGES T HE NATURAL MEANING OF UNDISCLOSED INCOME WHILE THE SECOND IS A RESTRICTIVE ONE WHICH SPECIFIES ITS BOUNDARIES INASMUCH AS THE LEGISLATURE HAS USED THE WORDS HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED . IT WAS ALSO HELD THAT SCOPE OF THESE TWO HAD TO BE CONSIDERED WITH REFERENCE TO DOS. IN PARA. 23 AT PG. 416 , THE TRIBUNAL CONSIDERED THE NATURAL MEANING OF THE WORD UNDISCLOSED INCOME AFTER REFERRING TO VARIOUS DICTIONARY MEANINGS : - IN THE LIGHT OF THE ARGUMENTS ON FACTS AND LAW AND A NUMBER OF PRECEDE NTS RELIED UPON THE DEPARTMENTAL APPEAL MAY KINDLY BE DISMISSED. 7 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US , E SPECIALLY THE IMPUGNED ORDERS PASSED BY THE REVENUE AUTHORITIES; WRITTEN SUBMISSIONS FILED BY THE ASSESSEE ALONGWITH THE PAPER BOOK S AND THE ARGUMENTS ADVANCED BY THE LD. IT (SS)A NO. 298/ DEL/ 2004 20 DR WHO HAS STRONGLY THE OPPOSED THE ARGUMENTS ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE WITH THE SUPPORT OF THE ASSESSMENT ORDER. WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE INVO LVED IN GROUND NO. 2 REGARDING DELETION OF ADDITION OF RS. 44,60,881/ - ON ACCOUNT OF PREMIUM OF KEROSENE OIL AND WITH REGARD TO GROUND NO. 3 RELATING TO DELETION OF ADDITION OF RS. 25,000/ - ON ACCOUNT OF EXTRA PREMIUM. WE FIND THAT THE LD. CIT(A) HAS CARE FULLY CONSIDERED THE FACTS AND SUBMISSIONS AND HAVE PERUSED THE RELEVANT RECORD AND THEREAFTER FOUND THAT THERE IS SUBSTANCE IN THE ARGUMENTS OF THE LD. COUNSEL THAT ON THE BASIS OF DISCREPANCIES / DEFECTS POINTED OUT BY THE AO ON EXAMINATION OF THE SEIZED MATERIAL IT WAS NOT POSSIBLE TO DRAW THE INFERENCE THAT THE ASSESSEE HAD RECEIVED PREMIUM ON THE ACCOUNT OF SALE OF KEROSENE OIL. WE FIND THAT LD. CIT(A) WAS AGREED WITH THE COUNSEL THAT THE AO WAS NOT JUSTIFIED TO RELY ON THE LETTER OF COMPLAINT ADDRESSED TO THE ASSTT. COMMISSIONER (FOODS), ONCE NO ACTION WAS TAKEN BY THE AC (FOODS) ON THE BASIS OF THAT LETTER THE ASSESSEE CONTINUED TO HAVE THE LICENSE TO DISTRIBUTE THE KEROSENE OIL. SIMILARLY DISCREPANCIES SUCH AS NON FILING OF CHALLANS, DIFFER ENCE IN POSITION OF STOCK AS PER TWO REGISTERES OR SOME DIFFERENCE IN THE QUANTITY OF SALES AS PER DIFFERENT REGISTERED FOUND AT THE TIME OF SEARCH COULD NOT BE USED AS THE BASIS TO INFER THAT THE ASSESSEE WAS RECEIVING PREMIUM BY INDULGING INTO BLACK M ARKETING OF KEROSENE OIL. LD. CIT(A) FURTHER OBSERVED THAT THERE WAS ALSO IT (SS)A NO. 298/ DEL/ 2004 21 SUBSTANCE IN THE COUNSEL S AR G UMENT THAT THE PURCHASES/ SALES / GROSS PROFIT RELATING TO KEROSENE OIL BUSINESS AS SHOWN IN THE REGULAR BOOKS OF ACCOUNTS STOOD UNDISTURBED BY THE AO . KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT AO HAS NOT POINTED OUT ANY DEFECT IN THE TRADING ACCOUNT PERTAINING TO THE OIL BUSINESS NOR PROVISIONS OF SECTION 145 OF I.T. ACT WERE APPLIED IN ASSESSEE S CASE. THUS, WITHOUT REJECTIO N OF THE TRADING ACCOUNT OF THE ASSESSEE, ANY ADDITION ON ACCOUNT OF PREMIUM FROM THE SALE OF THE SAME OIL WHICH ALREADY STOOD REFLECTED IN THE TRADING ACCOUNT WAS NOT LEGALLY JUSTIFIED. WE FURTHER NOTED THAT LD. CIT(A) HAS RIGHTLY HELD THAT THE EVIDENCE F OUND IN THE FORM OF LOOSE PAPERS / DIARY FORM THE PREMISES OF M/S KUMAR OILS AND M/S SHYAM LAL BALA PRASAD COULD NOT BE UTILIZED AS A VALID EVIDENCE AGAINST THE ASSESSEE ONCE THE ASSESSMENT IN THE CASE OF M/S KUMAR OIL WAS MADE ON THE RETURNED INCOME NIL. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE ORDER OF THE ITAT, MUMBAI BENCH DATED 5.4.2002 OF THE 3 RD MEMBER BENCH IN THE CASE OF SP GEOL VS. DCIT, WHEREIN THE APEX COURT DECISION IN THE CASE OF CBI VS. VC SHUKLA (1998) 35 SCC 410. LD. CIT(A) NOTED THAT IN THE IMPUGNED ORDER , THE AO HAD MADE THE LOOSE PAPERS / DIARIES RECOVERED FROM THE PREMISES OF THIRD PARTIES I.E. M/S KUMAR OILS AND M/S SHYAM LAL BALA PRASAD AS THE SOLE BASIS FOR THE ABOVE ADDITION. EVEN THERE WERE NO STATEMENTS O F THESE PARTIES CONFIRMING THE PAYMENT OF PREMIUM TO THE ASSESSEE. IT (SS)A NO. 298/ DEL/ 2004 22 THEREFORE, WE FIND THAT LD. CIT(A) HAS RIGHTLY HELD THAT AS PER THE PROVISIONS OF SECTION 158BC OF THE ACT THE EVIDENCE RECOVERED FROM THE PREMISES OF M/S KUMAR OILS AND M/S SHYAM LAL B ALA PRASAD COULD NOT BE MADE THE BASIS FOR MAKING ADDITION OF UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE FIND THAT LD. CIT(A) HAS RIGHTLY HELD THAT THE AO WAS NOT JUSTIFIED TO MAKE ADDITION ON ACCOUNT OF PREMIUM INCOME F ROM SALE OF KEROSENE OIL ON THE BASIS OF SEIZED MATERIAL RECOVERED FROM THE PREMISES OF THIRD PARTIES I.E. M/S KUMAR OILS AND M/S SHYAM LAL B ALA PRASAD, PARTICULARLY IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IN SUPPORT OF SUCH INCOME. THEREFORE, THE M AJOR AMOUNT OF RS. 29,14,027/ - AND RS. 26,62,075/ - COMPUTED ON ACCOUNT OF PREMIUM RECEIVED FROM M/S KUMAR OILS AND M/S SHYAM LAL BALA PRASAD INCLUDED IN THE PREMIUM INCOME AFTER DEDUCTION OF 20% FOR EXPENSES WERE NOT SUSTAINABLE , H ENCE, WE UPHOLD THE IMPUG NED ORDER ON THIS ISSUE OF DELETION OF ADDITION OF RS. 44 , 60,881/ - . 7.1 AS REGARDS THE DELETION OF ADDITION OF RS. 25,000/ - ON ACCOUNT OF EXTRA PREMIUM . K EEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS EXPLAINED ABOVE , AND ALSO IN VIEW OF THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) ON THE ISSUE IN DISPUTE, WE FIND NO INFIRMITY IN THE IMPUGNED O RDER ON THIS ISSUE AND HENCE, WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVENUE. IT (SS)A NO. 298/ DEL/ 2004 23 8 . IN THE RESULT, THE APPEAL O F THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 /0 3 /2015. SD / - S D / - [J.S. REDDY] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 2 5 /0 3 /2015 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES