ACIT Central Circle 18 & 19, V. Smt. Usha Thakkar,

ITSSA 506/MUM/2004

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9632 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-11-2013
• Assessment Year: misc
• Appeal Filed On: 03-09-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B M RAO
• Keywords: Search and seizure; Document seized; Principle of natural justice; Valuation report; Block assessment; Onus to prove; Documents seized
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND SANJAY ARORA (AM) . . , , ./I.T(SS).A. NO.494/MUM/2004 ( # # / BLOCK ASSESSMENT PERIOD: 1.4.1988 TO 10.3.1999) MRS.USHA MAYUR THAKKAR LEGAL HEIR OF SHRI MAYUR THAKAR 21, KSHITIJ HILL ROAD, BANDRA (W), MUMBAI-400050 / VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-18 & 19, ROOM NO.402, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( ( / APPELLANT) .. ( ) ( / RESPONDENT) ./I.T(SS).A. NO.506/MUM/2004 ( # # / BLOCK ASSESSMENT PERIOD: 1.4.1988 TO 103.1999) AS STT. COMMISSIONER OF INCOME TAX, CIRCLE-18 & 19, ROOM NO.402, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 MUMBAI. / VS. MRS.USHA MAYUR THAKKAR LEGAL HEIR OF SHRI MAYUR THAKAR 21, KSHITIJ HILL ROAD, BANDRA (W), MUMBAI-400050 ( ( / APPELLANT) .. ( ) ( / RESPONDENT) ./ ./PAN/GIR NO. : ( + / ASSESSEE BY SHRI B. M .RAO ) ( + /REVENUE BY SHRI SANTOSH KUMAR + / / DATE OF HEARING : 14.11.2013 + / /DATE OF PRONOUNCEMENT : 27.11.2013 / O R D E R PER B.R.MITTAL, JM: THESE CROSS-APPEALS ARE FILED BY ASSESSEE AND THE DEPARTMENT AGAINST ORDER OF LD. CIT(A) DATED 8.7.2004 FOR BLOCK ASSESSMENT PER IOD 1.4.1988 TO 10.3.1999, PASSED BY ASSESSING OFFICER U/S 158BC(C) OF THE INCOME TAX ACT, 1961 (THE ACT). I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 2 2. GROUNDS OF APPEAL TAKEN BY ASSESSEE ARE AS UNDER : THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO EACH OTHER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE - 1. THE ORDER PASSED U/S 158BC IS BAD IN LAW AN D AB INITIO VOID. 2. THE ORDER PASSED IS BAD IN LAW FOR LACK OF NATURAL JUSTICE AND FOR WANT OF RATIONALE IN NOT CONSIDERING THE FACTS OF THE CASE PROPERLY WHILE SUSTAINING THE ORDER OF THE AO ON VARIOUS GROUNDS. HE ERRED IN COM PUTING THE TOTAL UNDISCLOSED INCOME AT RS.5,04,800.00. 3. (A) THE LEARNED CIT(A) ERRED IN SUSTAINING THE F OLLOWING ADDITIONS AS UNDISCLOSED INCOME: ASSESSMENT YEAR AMOUNT (RS) 1989-90 55,750.00 1994-95 1,21,205.00 1995-96 1,21,205.00 (B) LEARNED CIT(A) FAILED IN NOT APPRECIATING THAT THE ADDITIONS MADE BY THE AO AND SUSTAINED BY HIM WAS WITHOUT EVIDENCE OF REC ORD JUSTIFYING SUCH ADDITIONS. HE OUGHT TO HAVE APPRECIATED THAT THE AO HAD NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THE APPELLANT EARNED SUCH IN COME. HE OUGHT TO HAVE FURTHER APPRECIATED THAT WHAT WAS TAXABLE UNDER LAW AS REAL INCOME AND NOT ANY FIGURE WORKED OUT ON SURMISES, SUSPICIONS AND ESTIM ATES BASED ON THEM. 4. THE LEARNED CIT(A) ERRED IN SUSTAINING ADDI TION OF RS.75000 MADE BY THE AO ON ESTIMATES OF TRAVEL EXPENSES DESPITE BRINGING ON RECORD AS A MATTER OF FACT THAT HER HUSBAND WAS NRI AND WAS IN DUBAI TO SPONSO R HER TRAVEL EXPENSES AND LIVING EXPENSES. WHILE HE APPRECIATED THAT THE LIVI NG COULD HAVE BEEN PROVIDED BY HUSBAND, HE WRONGLY HELD THAT THE TICKETING PART SHOULD BE HELD TO HAVE BEEN SPENT BY THE APPELLANT HERSELF AND THEREFORE TAX SU CH ESTIMATED AMOUNT AS UNDISCLOSED INCOME. HE ERRED IN PARTLY ACCEPTING AN D PARTLY DENYING THE CLAIM OF THE APPELLANT. 5. THE LEARNED CIT(A) ERRED IN SUSTAINING ADDIT ION OF RS.1,31,640.00 AS INCOME OF PROPRIETARY CONCERN SUNIL CHEMICAL INDU STRIES. HE OUGHT TO HAVE APPRECIATED THAT (A) GROSS PROFIT DISCLOSED BY THE APPELLANT WAS UPHELD BY THE CIT(A); (B) THAT SHE HAD MAINTAINED PROPER ACCOUNTS ; (C) THAT STOCK BOOK WAS MAINTAINED ON DAY TO DAY BASIS AND WAS PRODUCED FOR VERIFICATION AND THAT THE PURCHASES WERE FROM KNOWN OIL COMPANIES AND COMPLET E ACCOUNT OF PURCHASE AND SALE WERE AVAILABLE. 3. GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT ARE A S UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)ERRED IN DIRECTING TO DELETE THE ADDITION OF RS.21,731/- MADE ON ACCOUNT OF UNEXPLAINED JEWELLERY AND GOLD ORNAMENTS WITHOUT AP PRECIATING THE FACT THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF ACQUIS ITION OF THE JEWELLERY. I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 3 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANCES MADE OF RS.3,50,00 0/- TO RS.75,000/- IN CONNECTION WITH THE FOREIGN TRAVEL EXPENSES INCURRE D BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO F ILE THE REQUIRED DETAILS AND EXPLAIN THE SOURCE OF EXPENSES WITH SUPPORTING DOCU MENTARY EVIDENCE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ESTIMATING THE DISALLOWANCES ON ACCOUNT OF FOREI GN TRAVEL EXPENSES AT RS.75,000/-- WITHOUT ANY BASIS OR DOCUMENTARY EVIDE NCE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION OF RS.40,4 16/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF AC COUNTS AND SUPPORTING BILLS, VOUCHERS OR DOCUMENTS FOR VERIFICATION AND WITHOUT APPRECIATING THE FACTS THE GROSS PROFIT OF THE CONCERN FOR THE IMMEDIATELY PRE CEDING ASSESSMENT YEAR WAS 2.97% AS AGAINST 0.8 1% SHOWN BY THE ASSESSEE. 4. FIRSTLY, WE TAKE UP THE APPEAL OF THE ASSESSEE B EING I.T(SS).A. NO.494/MUM/2004. 5. AT THE TIME OF HEARING, LD. AR SUBMITTED THAT GROUND NO.1 OF THE APPEAL IS NOT PRESSED FOR AND GROUND NO.2 OF THE APPEAL IS GENER AL IN NATURE AND NO SPECIFIC ADJUDICATION IS REQUIRED. IN VIEW OF ABOVE, THESE GROUNDS ARE DISMISSED. 6. TO ENABLE TO ADJUDICATE GROUND NO.3 OF APPEAL , WE CONSIDER IT NECESSARY TO STATE THE RELEVANT FACTS. THE ASSESSEE IS THE WIF E OF SHRI MAYUR M THAKKAR, SON OF SHRI MANOJ M.THAKKAR, WHO IS ONE OF THE PIONEERS OF CHE MICAL TRADE AND DEALING IN CHEMICALS. THERE WAS A SEARCH AND SEIZURE OPERATI ON U/S 132 IN THAKKAR GROUP OF CASES ON 21.1.1999. THE SEARCH OPERATION COVERED BOTH, THE BUSINESS PREMISES AS WELL AS RESIDENTIAL PREMISES OF THE MEMBERS OF THA KKAR FAMILY. THE THAKKAR FAMILY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AS WELL AS TRADING IN VARIOUS CHEMICALS. DURING THE RELEVANT YEARS THE ASSESSEE WAS ASSOCIAT ED WITH FOLLOWING BUSINESS CONCERNS OF THAKKAR GROUP: NAME OF THE FIRM/CONCERNS NATURE OF BUSINESS DESIGNATION 1.JALARAM PETROCHEM TRADER IN PETROCHEMICALS PARTNER 2.USHA EXPORTS EXPORT OF FISH PARTNER 3.SUNIL CHEMICAL INDUSTRIES TRADER IN PROTROCHEMICALS PROPRIETOR 7. IT IS RELEVANT TO STATE THAT SUNIL CHEMICAL IND USTRY CARRIED OUT TRADING BUSINESS IN PETROCHEMICALS UNDER THE PROPRIETORSHIP OF ASSES SEE ONLY FOR FOUR MONTHS I.E. TILL 31.3.1998 AND FROM 1.4.1998 THIS CONCERN WAS CONVER TED INTO A PARTNERSHIP FIRM WITH ASSESSEE AND HER HUSBAND AS PARTNERS. I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 4 8. PURSUANT TO SEARCH AT THE PREMISES OF THE ASSESS EE, NOTICE U/S 158BC (A) WAS ISSUED ON 13.11.1999, VIDE WHICH THE ASSESSEE WAS A SKED TO FILE BLOCK RETURN COVERING THE PERIOD FROM 1.4.1988 TO 21.1.1999. THE ASSESS EE FILED RETURN FOR THE BLOCK PERIOD AFTER EXPIRY OF 45 DAYS SHOWING UNDISCLOSED INCOME AT RS. NIL. AO DETERMINED UNDISCLOSED IN AT RS.8,95,570/- INTERALIA DETERMINI NG THE INCOME OF THE ASSESSEE ON ESTIMATED BASIS FOR NON FILING OF RETURN OF RS.55, 750/- FOR ASSESSMENT YEAR 1989-90, RS.1,21,205/-FOR ASSESSMENT YEAR 1994-95 AND RS.1, 21,205/- FOR ASSESSMENT YEAR 1995-96, WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A ) AND THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 9. AO HAS STATED THAT THE ASSESSEE DID NOT FILE RE TURN OF INCOME NOR DETAILS WERE GIVEN. THEREFORE, AO TOOK AVERAGE TOTAL INCOME F OR ASSESSMENT YEAR 1991-92 AND 1992-93 TO ESTIMATE THE INCOME AT RS.55,750/- FOR A SSESSMENT YEAR 1989-90. SIMILARLY, THE AO HAS STATED THAT ASSESSEE NEITHER FILED R ETURNS NOR THE DETAILS WERE GIVEN BY HER AND THEREFORE AO CONSIDERED THE INCOME FOR PR ECEDING ASSESSMENT YEAR 1993-94 AND SUCCEEDING ASSESSMENT YEAR 1996-97 AND TOOK AVE RAGE RETURNED INCOME FOR ASSESSMENT YEARS 1994-95, 1995-96 AT RS.1,21,205/- FOR EACH OF THE ASSESSMENT YEAR. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT(A) VIDE PARA 5.1 OF THE IMPUGNED ORDER HAS CONFIRMED THE ACTION OF THE AO WHICH READS AS UNDER: 5. 1 ESTIMATED UNDISCLOSED INCOME FOR A.YS, 1989-9 0, 1994-95 & 1995-6 : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSION MADE BY THE COUNSEL OF THE APPELLANT. IT IS AN UNDISPUTED FACT ALL THREE ASSESSMENT YEARS FALL INTO THE BLOCK PERIOD. IT IS ALSO UNDISPUTED THAT T HE APPELLANT ASSESSEE DID NOT FURNISH ANY RETURN OF INCOME FOR ANY OF THE AFORESA ID THREE ASSESSMENT YEARS. NOT ONLY THIS, EVEN DURING THE COURSE OF BLOCK ASSE SSMENT PROCEEDINGS OR DURING THE HEARING OF THE APPEAL, THE APPELLANT HAS NOT FU RNISHED ANY DETAILS OF INCOME EARNED BY HER DURING PREVIOUS YEARS RELEVANT FOR A. YS. 1989-90, 1994-95 & 1995- 96. THE APPELLANT HAS ALSO NOT BEEN ABLE TO PROVE T HAT SHE HAD INCOME BELOW TAXABLE LIMIT IN ANY OF THESE ASSESSMENT YEARS. AS PER THE SUB SECTION (3) OF SECTION L58BB, IT IS SPECIFICALLY LAID DOWN THAT T HE BURDEN OF PROVING TO THE SATISFACTION OF THE ASSESSING OFFICER THAT ANY UNDI SCLOSED INCOME HAD ALREADY BEEN DISCLOSED IN ANY RETURN OF INCOME FILED BY TH E ASSESSEE BEFORE THE COMMENCEMENT OF SEARCH OR OF THE REQUISITION, AS TH E CASE MAY BE, SHALL BE ON THE ASSESSEE. THUS. THE BURDEN OF PROOF HAS BEEN C LEARLY CAST UPON THE APPELLANT. IN THE CASE OF THE APPELLANT, SUCH BURDE N OF PROOF HAS NOT BEEN DISCHARGED AT ALL. THE APPELLANTS ATTITUDE IN THIS REGARD HAS BEEN OF TOTAL RECALCITRANCE. IF THE APPELLANT FEEL THAT THE INCOM E ESTIMATED BY THE ASSESSING OFFICER IS NOT CORRECT THEN SHE WAS FREE TO PUT COR RECT FACTS AND FIGURES BEFORE THE ASSESSING OFFICER REGARDING HER INCOME EARNED B Y HER DURING THESE PREVIOUS YEARS. SHE COULD HAVE DONE THIS EVEN AT THE STAGE OF FIRST APPEAL. HOWEVER, NOTHING SUCH HAS BEEN DONE. IT IS A SETTLED LAW THA T IN THE APPROPRIATE CIRCUMSTANCES, THE ASSESSING OFFICER IS WELL WITHIN HIS RIGHTS TO ESTIMATE UNDISCLOSED INCOME OF AN ASSESSEE. IN MY OPINION, F ACTS AND CIRCUMSTANCES OF I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 5 THE CASE OF THE APPELLANT SO WARRANT. FURTHER, EVEN AS PER SCHEME OF SECTION 158BB, IT IS CLEAR THAT IF AN ASSESSEE FAILS TO FIL E RETURN OF INCOME OF ANY OF THE YEARS FALLING IN THE BLOCK PERIOD, WITHIN THE PRESC RIBED TIME LIMIT, THEN, THE ASSESSING OFFICER IS FREE TO ESTIMATE UNDISCLOSED I NCOME IN RESPECT OF SUCH YEAR/ YEARS. IT IS ALSO RELEVANT TO APPRECIATE THAT THE A PPELLANT ASSESSEE HAS NOT, ON THE BASIS OF ADEQUATE EVIDENCE, SUBMITTED THAT THE INCOME ESTIMATED BY THE ASSESSING OFFICER IS EXCESSIVE. THE APPELLANT HAS A LSO FAILED TO PROVE THAT THE INCOME TAXED BY THE ASSESSING OFFICER AS UNDISCLOSE D INCOME IN ANY OF THE THREE ASSESSMENT YEARS IS SUCH WHICH WAS PARTLY OR FULLY DISCLOSED BY THE APPELLANT DURING THE BLOCK PERIOD. THE BASIS ADOPTED BY HIM I S NOT UNREASONABLE. IN ABSENCE OF COOPERATION FROM THE APPELLANT ASSESSEE, HE IS JUSTIFIED TO RESORT TO ESTIMATION CONSIDERING THE QUANTUM OF INCOME DECLAR ED BY THE APPELLANT IN THE PRECEDING AS WELL AS THE SUCCEEDING ASSESSMENT YEAR S AND TAKING AVERAGE OF THE SAME. SURPRISINGLY, THE APPELLANT HAS CHOSEN NOT TO FURNISH ANY CREDIBLE EVIDENCE AND REGARDING HER INCOME FOR ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION. IT IS ALSO NOT EXPLAINED AS WHAT PREVENTS THE APPEL LANT ASSESSEE TO DISCLOSE ITS TRUE AND CORRECT ACCOUNT OF THE INCOME EARNED BY IT . CONSIDERING THESE FACTS, IN MY CONSIDERED OPINION, THE ASSESSING OFFICER IS JUS TIFIED IN ESTIMATING THE UNDISCLOSED INCOME FOR THESE THREE YEARS. THE ADDIT IONS OF RS.55,750/-, RS.L,2L,205/- & RS.1,21,205/- FOR A.YS. 1989-90, 19 94-95 & 1995-96 RESPECTIVELY ARE CONFIRMED. HENCE, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL 10. LD. AR SUBMITTED THAT THERE ARE NO DOCUMENT SEI ZED DURING THE COURSE OF SEARCH THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT IN THE RELEVANT ASSESSMENT YEARS VIZ 1989-90, 1994-95 AND 1995-96. HE SUBMITTE D THAT THE INCOME OF THE ASSESSEE FOR THE SAID ASSESSMENT YEARS WERE BELOW TAXABLE LI MIT AND THEREFORE, THE ASSESSEE DID NOT FILE RETURNS. HE FURTHER SUBMITTED THAT IN TH E BLOCK ASSESSMENT, UNDISCLOSED INCOME IS TO BE DETERMINED ONLY ON THE BASIS OF SEIZED DOC UMENTS AND THE INCOME COULD NOT BE DETERMINED ON ESTIMATED BASIS. HE SUBMITTED THAT EVEN IF THE INCOME IS TO BE ESTIMATED, IT HAS TO BE ESTIMATED ON THE BASIS OF E ARLIER ASSESSMENT YEARS AND NOT ON THE BASIS OF SUBSEQUENT ASSESSMENT YEARS . LD. AR ALSO REFERRED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DR. M.K.E. MENON (248 ITR 310) AND SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH CO URT HAS HELD THAT THE AO CANNOT ESTIMATE UNDISCLOSED INCOME ON AN ARBITRARY BASIS A ND ACCORDINGLY CONFIRMED THE ORDER OF TRIBUNAL IN WHICH THE TRIBUNAL DELETED THE ADD ITION MADE BY AO. 11. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. HE SUBMITTED THAT NO DOCUMENTS HAVE BEEN PLACED BY THE ASSESSEE THAT THE ASSESSEE HAD INCOME BELOW TAXABLE LIMIT IN RESPECT OF ASSESSMENT YEARS VIZ 1989-90, 1994-95 AND 1995-96. HE SUBMITTED THAT AS PER SECTION 158BB(3), THE BURD EN IS ON THE ASSESSEE TO PROVE THAT ANY UNDISCLOSED INCOME HAD ALREADY BEEN DISCLOSED IN ANY RETURN OF INCOME FILED BY ASSESSEE BEFORE COMMENCEMENT OF SEARCH. SINCE ASS ESSEE HAS NOT PLACED ANY I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 6 DOCUMENT ON RECORD, THE AO HAS RIGHTLY ADOPTED THE FORMULA OF ESTIMATING THE INCOME CONSIDERING OTHER ASSESSMENT YEARS OF THE ASSESSEE PARTICULARLY WHEN THE AO HAS STATED THAT THE SOURCE OF INCOME OF THE ASSESSEE WERE CON STANT. HE SUBMITTED THAT THE ORDER OF LD. CIT(A) BE CONFIRMED. 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND THE ORDER OF HONBLE JURISDICTIONAL HI GH COURT (SUPRA) RELIED UPON BY LD. AR IN THE LIGHT OF ORDERS OF AUTHORITIES BELOW. IT IS A FACT THAT THE ASSESSEE HAS FAILED TO PROVE BY ANY DOCUMENTARY EVIDENCE THAT THE INCOME OF ASSESSEE IN THE ASSESSMENT YEARS VIZ 1989-90, 1994-95 AND 1995-96 WERE BELOW T AXABLE LIMIT. THE ASSESSEE HAS ALSO NOT DISPUTED THE FACT, WHICH HAVE BEEN STATED BY AO THAT THE SOURCE OF INCOME OF THE ASSESSEE IN THE ABOVE ASSESSMENT YEARS VIZ 199 3-94 OR 1996-97 WERE CONSTANT. WE ALSO OBSERVE THAT THE ASSESSEE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS WAS NON-COOPERATIVE AND NON-COMPLIED WITH THE NOTICES I SSUED BY AO. CONSIDERING THE ABOVE FACTS AND IN THE ABSENCE OF ANY DOCUMENT ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY STATED THAT IN THE ABSENCE OF CO-OPERATION FROM THE ASSESSEE, THE AO IS JUSTIFIED TO RESORT TO ESTIM ATE, CONSIDERING THE QUANTUM OF INCOME DECLARED BY ASSESSEE IN THE PRECEDING AS WELL AS I N THE SUCCEEDING ASSESSMENT YEARS IN TAKING AVERAGE OF THE SAME. THAT THE ASSESSEE HAS CHOSEN NOT TO FURNISH ANY CREDIBLE EVIDENCE REGARDING HER INCOME FOR ANY OF THE ASSESS MENT YEAR UNDER CONSIDERATION. THEREFORE, WE AGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE INCOME TAXED BY AO AS UNDISCLOSED IN COME IN ANY OF THE AFORESAID THREE ASSESSMENT YEARS IS SUCH WHICH IS EXCESSIVE OR WHIC H WAS PARTLY OR FULLY DISCLOSED BY ASSESSEE DURING THE BLOCK PERIOD. CONSIDERING THE F ACTS OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). H ENCE, WE CONFIRM HIS ORDER AND REJECT GROUND NO.3 TAKEN BY ASSESSEE. 13. GROUND NO.4 OF THE APPEAL IS CONNECTED WITH G ROUNDS NO.2 AND 3 OF THE APPEAL TAKEN BY DEPARTMENT. 14. AO HAS STATED THAT ASSESSEE HAD VISITED DUBAI D URING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1994-95, ONCE AND DURING THE AS SESSMENT YEAR 1995-96, TWICE. AO HAS STATED THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF EXPENDITURE INCURRED AND ALSO FAILED TO FURNISH OTHER NECESSARY DETAILS. HE HAS FURTHER STATED THAT THE ASSESSEE NEITHER FURNISHED QUANTUM OF EXPENDITURE NOR SOURCE THEREOF. THEREFORE, AO HAS ESTIMATED EXPENSES ON FOREIGN JOURNEY INCLUDING FA RE, BOARDING, LODGING, SHOPPING, ENTERTAINMENT EXPENDITURE AND INCIDENTAL EXPENSES O F RS.1,00,000/- FOR THE FOREIGN VISITS DURING THE PREVIOUS YEAR RELEVANT TO ASSESS MENT YEAR 1993-94 AND RS.2,50,000/- I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 7 FOR TWO TIMES FOREIGN VISITS DURING THE PREVIOUS YE AR RELEVANT TO ASSESSMENT YEAR 1994- 95. THE ASSESSEE DISPUTED THE ABOVE SAID ADDITION B EFORE THE LD. CIT(A). 15. ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED THA T ASSESSEE IS THE WIFE OF SHRI MAYUR M.THAKKAR. HE WAS IN DUBAI AND WAS NON RES IDENT DURING THE AFORESAID PERIOD. SHRI MAYUR SPENT ON VISITS OF HIS WIFE, THE ASSESS EE. IT WAS ALSO CONTENDED THAT THE TICKETS HAD ALSO COME FROM DUBAI, THEREFORE, I T WAS NOT REASONABLE AND LOGIC TO ASSUME THAT THE ASSESSEE HAD SPENT OUT OF HER UNDIS CLOSED INCOME ON HER VISITS TO DUBAI AND HER HUSBAND DID NOT SPEND FOR HER LIVING THEREAT. IT WAS ALSO CONTENDED THAT THE HUSBAND OF THE ASSESSEE HAD DECLARED RS.70,00, 000/- AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD AND PAID TAXES THEREON. THEREFORE, ES TIMATION OF UNDISCLOSED INCOME ON THE TRAVEL OF ASSESSEE TO DUBAI IS UNCALLED FOR. H ER PASSPORT DOES NOT CONTAIN ANY SUCH EVIDENCE THAT SHE HAD TAKEN ANY EXCHANGE WITH HER. 16. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS HELD VIDE PARA 5.3 THAT NO INCRIMINATING EVIDENCE WERE FOUND DURIN G THE COURSE OF SEARCH REGARDING UNDISCLOSED INCOME ATTRIBUTABLE TO FOREIGN TRAVELI NG IS CONCERNED. LD. CIT(A) HAS ACCEPTED THE FACT THAT EXPENSES OF BOARDING, LODGI NG, LOCAL TRAVELLING AND ENTERTAINMENT EXPENDITURE ETC, WERE BORN BY HER HU SBAND. HOWEVER, HE HAS CONSIDERED THAT EXPENDITURE ON ACCOUNT OF FOREIGN TRAVELLING CAN BE ESTIMATED AT RS.75,000/- I.E. AT THE RATE OF RS.25,000/- PER TRI P AS UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, LD. CIT(A) HAS DELETED A SUM O F RS.2,75,000/- OUT OF THE ADDITION OF RS.3,50,000/- MADE BY AO AND SUSTAINED THE ADD ITION TO THE EXTENT OF RS.75,000/-. HENCE, ASSESSEE AS WELL AS DEPARTMENT ARE IN APPEAL BEFORE THE TRIBUNAL. 17. DURING THE COURSE OF HEARING, LD. AR MADE HIS S UBMISSIONS ON THE LINES OF SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE HUSBAND OF THE ASSESSEE WAS A NON-RESIDENT AND WAS STAYING IN DUBAI. HE WAS CARRYING ON HIS BUSINESS. HE REITERATED THE FACTS THAT HER HUSBAND SPENT ON THE TRAVELLING OF THE ASSESSEE AND SHE STAYED WITH HIM DURING HER VISITS TO DUBAI AND THEREFORE, THE ASSESSEE DID NOT INCUR ANY EXPENDITURE MUCH LESS FR OM UNDISCLOSED SOURCE. IT WAS ALSO CONTENDED THAT THERE WAS NO EVIDENCE TO CITE THAT T HERE WAS ANY EXPENDITURE SO INCURRED BY ASSESSEE FROM UNDISCLOSED SOURCE ON HER VISITS TO DUBAI IN PREVIOUS YEAR RELEVANT TO ASSESSMENT YEARS 1994-95 AND 1995-96. LD. AR SUBMITTED THAT LD. CIT(A) HAS ONLY ON PRESUMPTION AND ARBITRARILY ESTIMATED THE EXPENDITURE ON FOREIGN TRAVELING OF THE ASSESSEE AT THE RATE OF RS.25,000/- PER TRIP . HE SUBMITTED THAT IN THE BLOCK ASSESSMENT YEARS NO INCOME CAN BE CONSIDERED MEREL Y ON PRESUMPTIONS AND I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 8 ASSUMPTIONS AND THE UNDISCLOSED INCOME IS TO BE BA SED ON EVIDENCE FOUND AS A RESULT OF SEARCH. 18. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER O F AO. 19. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF AUTHORITIES BELOW. WE O BSERVE THAT DURING THE PERIOD, THE ASSESSEE HAD VISITED DUBAI, HER HUSBAND WAS NRI, STAYING AT DUBAI. THE DEPARTMENT HAS NOT PRODUCED ANY EVIDENCE THAT THE ASSESSEE HAD NOT STAYED WITH HER HUSBAND DURING HER VISITS TO DUBAI IN THE PREVIOUS YEARS RE LEVANT TO ASSESSMENT YEARS 1994-95 AND 1995-96. WE OBSERVE THAT HER HUSBAND WHO WAS AL SO SEARCHED HAD DECLARED RS.70,00,000/- AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD AND PAID TAXES THEREON. THE DEPARTMENT HAS STATED THAT THE ASSESSEE HAS NOT FU RNISHED ANY EVIDENCE TO SUPPORT HER EXPLANATION THAT DURING HER VISITS TO DUBAI SHE S TAYED WITH HER HUSBAND AND HER HUSBAND BORN THE EXPENSES OF BOARDING, LODGING, LOC AL TRAVELING ETC ON HER BEHALF. WE ARE OF THE VIEW THAT ONUS IS ON THE DEPARTMENT T O PROVE THAT THE SAID EXPENSES WERE NOT INCURRED BY HUSBAND OF THE ASSESSEE BUT WERE BO RN BY THE ASSESSEE FROM UNDISCLOSED INCOME. THE DEPARTMENT IS ASKING TO P ROVE SOMETHING THAT DOES NOT EXIST. THERE IS NO DISPUTE THAT NO MATERIAL/DOCUMENT OR EV IDENCE WAS FOUND DURING THE COURSE OF SEARCH AND /OR INQUIRIES MADE FOLLOWING SEARCH T HAT THE ASSESSEE HAD INCURRED THE EXPENDITURE ON HER VISITS TO DUBAI AND NOT HER HUSB AND. WE OBSERVE THAT LD. CIT(A) HAS STATED THAT NO INCRIMINATING EVIDENCE WAS FOUND DUR ING THE COURSE OF SEARCH REGARDING UNDISCLOSED INCOME ATTRIBUTABLE TO FOREIGN TRAVELLI NG OF THE ASSESSEE. CONSIDERING THE SAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.2,75,000/- WHICH HAS BEEN ESTIMATED ON ACCOUNT OF BOARDING, LODGING, LOCAL TRAVELLING AND ENTERTAINMENT ETC. FURTHER, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) IS NOT JUSTIFIED TO ESTIMATE A SUM OF RS.25, 000/- PER TRIP AGGREGATING TO RS.75,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF FOREIGN TRAVELING PARTICULARLY WHEN NO EVIDENCE IS PLACED ON RECORD A ND THE SAID ESTIMATION IS MADE ARBITRARILY AND NOT ON ANY COGENT MATERIAL ON RECOR D. HENCE, WE DELETE THE SAID ADDITION OF RS.75,000/- AS SUSTAINED BY LD. CIT(A) , BESIDES CONFIRMING THE ORDER OF LD. CIT(A) IN GIVING RELIEF OF RS.2,75,000/- OUT OF TO TAL ADDITION OF RS.3,50,000/- MADE BY AO. ACCORDINGLY, GROUND NO.4 OF THE APPEAL TAKEN B Y ASSESSEE IS ALLOWED. CONSEQUENTLY, GROUND NO.2 AND 3 OF THE APPEAL TAKEN BY DEPARTMENT ARE REJECTED. I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 9 20. IN RESPECT OF GROUND NO.5 OF THE APPEAL TAKEN BY ASSESSEE, THE LD. CIT(A) HAS DISCUSSED THE RELEVANT PART OF ASSESSMENT ORDER IN PARAS 3.5 TO 3.6.1 OF THE IMPUGNED ORDER AS UNDER : 3.5 AN ADDITION OF RS.39,680/- IS MADE ON THE BASI S OF SEIZED DOCUMENT I.E. PG.NO.172 OF ANNEXURE A-I WHICH WAS FOUND AND INVEN TORISED DURING THE COURSE OF SEARCH AND THE OFFICE OF SUNIL CHEMICAL INDS. AT SEWREE (EAST). THE ADDITION HAS TWO ITEMS: (A) RS.3,680/- AND (B) RS.36,000/-. THE DETAILS AS NOTED ON PG.NO.172 ARE AS UNDER:- BILL PREPARED BUT ACTUAL DISPATCH HAS NOT BEEN DON E 1/7/98 6-MTO (B) LAXMI PAINTS & ALLIED PRODUCT 880 15/7/98 13-MTO (B) DELUX PAINTS 2000 23/7/98 15-MTO (B) PEARL SYNTHET IC DISPATCH QTY. 2100 BILL PREPARED FOR 20 00 27/7/98 19-MTO (B) SKY ENTERPRIS ES DISPATCH QTY. 3000 BILL PREPARED FOR 2 800. 3.5.1 THE APPELLANT ASSESSEE WAS REQUIRED TO EXPLA IN THE CONTENTS OF THE NOTING AND THE TRANSACTIONS. VIDE SUBMISSIONS DATED 22/1/2 001, IT WAS EXPLAINED THAT THE NOTINGS WERE PART OF THE REGULAR BOOKS OF ACCO UNT. THE ASSESSING OFFICER HAS HELD THAT THE EXPLANATION DOES NOT ADDRESS THE MAIN ISSUE I.E. THE DIFFERENCE IN DISPATCH AND BILL QUANTITY AND IN CERTAIN CASES RAI SING OF BILLS WITHOUT ACTUAL DISPATCH. AT THIS STAGE, THE ASSESSING OFFICER OBSE RVED THAT THAKKAR GROUP HAS BEEN SELLING CHEMICALS OUT OF BOOKS ON CASH PREMIUM AND USING ACCOMMODATION FROM PARTIES LIKE VORA GROUP. THESE FACTS ARE EVID ENT FROM ASSESSMENT ORDERS OF OTHER FAMILY MEMBERS AND CONCERNS. KEEPING THE EVAS IVE REPLY OF THE APPELLANT IN MY MIND AND THE FACTOR OF CHARGING THE PREMIUM O N SALES AND THE FACT OF UNRECORDED SALES THE ASSESSING OFFICER HELD, THAT IN THE FIRST TWO ENTRIES, THE ASSESSEE HAD SOLD MTO (880 + 2000 LTRS) IN THE MARK ET ON CASH PREMIUM AND HAS RAISED BILLS AGAINST THE PARTIES WHOSE NAMES AR E. APPEARING ON THE PAGE. AS ELABORATELY DISCUSSED IN THE ASSESSMENT ORDERS OF O THER MEMBERS OF THE THAKKAR GROUP, SUCH KIND OF CHEMICALS WEE SOLD AT A CASH PR EMIUM OF 10% ON THE ACTUAL SALE SHOWN IN THE BILLS. PAGE 171 SHOWS THE RATS OF MTO WHICH IS APPROXIMATELY RS.11 PER 1 LTR. THEREFORE, THE CASH PREMIUM ON SAL E OF 2880 LTRS MTO WILL BE RS.3680/- 3.5.2 REGARDING 3RD AND 4TH ENTRIES, THE ASSESSING OFFICER HAS HELD THAT 300 LTRS OF MTO WAS SOLD WITHOUT REFLECTING THE SAME IN THE CONCERNED BILLS. THEREFORE, UNRECORDED SALES WILL BE RS.300/- X RS.12.10 = RS. 36,000/- APPROXIMATELY. THE TOTAL OF THE ABOVE SALES PROCEEDS OF RS.39,680/-IS TREATED AS UNDISCLOSED INCOME PERTAINING TO THE PERIOD RELEVANT TO A.Y. 1999-2000 . 3.6 LAST ITEM OF UNDISCLOSED INCOME IS RS.91,960/- . IT IS BASED ON PG.NO173 OF ANNEXURE A- I CITED SUPRA. IT PERTAINS TO CASH S ALES OF MTO TO VARIOUS PARTIES WITHOUT RAISING BILLS. CONTENTS OF PAGE NO.173 ARE AS UNDER: 15/6/98 SUNRISE PAINT 2000 26/6/98 R.S. PAINT 400 28/6/98 LAXMI PAINT 1400 6/7/98 SUNRISE PAINTS 2200 14/7/98 R.S.IND. 1000 I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 10 27/7/98 STANDARD DRUG & BAR 600 7600 3.6.1 DURING THE COURSE OF BLOCK ASSESSMENT PROCEED INGS, AS PER THE. ASSESSING OFFICER, THE APPELLANT ASSESSEE DID NOT ADDRESS THE ISSUE. IT WAS SIMPLY STATED THAT THESE WERE PART OF REGULAR BOOKS OF ACCOUNT. T HE ASSESSING OFFICER ON THE OTHER HAND HAS HELD THAT. THE COMPUTERIZED FLOPPIE S WERE SEIZED DURING THE SEARCH AND PRINTOUTS HAVE BEEN TAKEN IN THE PRESENC E OF ASSESSEES REPRESENTATIVE, DOES NOT SUPPORT THE ASSESSEES CON TENTION. IN FACT, THE PENCIL NOTINGS APPEARING ON PAGE 175 IS MONTH-WISE SUMMARY OF RECORDED AND UNRECORDED SALE OF MTO DURING F.Y.1998-99. PERUSAL OF THIS PAGE CLEARLY SHOWS THAT THE ASSESSEE HAD SOLD 7600 LTR OF MTO DURING J UNE TO JULY 1998. THIS FURTHER STRENGTHENS THE FACT APPEAR ON PG. 173. THEREFORE, IT IS HELD THAT THE ASSESSEE SOLD MTO OUT OF BOOKS AND THIS UNRECORDED SALE IS A DDED TO THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE FOR A. Y. 1999-00 FALLING IN THE BLOCK PERIOD. THE ADDITION UNDER THIS HEAD WILL BE RS. 7600/- LTR X RS.1210=91 ,960/- 21. IN THE APPEAL, THE LD. CIT(A) VIDE PARAS 5.5 TO 5.5.2 OF THE IMPUGNED ORDER HAS CONFIRMED THE ADDITION OF RS.1,27,960/- AFTER GIVI NG RELIEF OF RS.3,680/- WHICH READS AS UNDER : 5.5 ADDITION OF RS.39,680/- + RS.91,960/- = RS.1, 31,640/-:- THESE ADDITIONS ARE BASED ON SEIZED DOCUMENTS FOUND AT THE PREMISES OF THE APPELLANT. IT IS , THEREFORE, THE ONUS OF THE APP ELLANT TO EXPLAIN THE NATURE AND CONTENTS OF THESE CO TRANSACTIONS. FIRST TO TAKE PA GE 172. IT CONTAINS 4 ENTRIES. SO FAR AS TWO ENTRIES DATED 1.7.98 AND 15.7.98 ARE CONCERNED, IN MY OPINION THERE IS NO JUSTIFICATION TO MAKE ANY ADDITION BECA USE THERE IS NO EVIDENCE THAT THE GOODS WERE ACTUALLY DISPATCHED AND EVEN AFTER S UCH DISPATCH, THE BILLS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. ADDI TION OF RS.3,600/- IS, THEREFORE DELETED. SO FAR AS THE TWO OTHER BILLS DA TED 23.7.1998 AND 27.7.1998 ARE CONCERNED, THE CONTENTS OF THE SEIZED DOCUMENTS UNAMBIGUOUSLY SHOW THAT PART OF THE GOODS DISPATCHED WERE WITHOUT BILL, IN FIRST BILL, THE DIFFERENCE IS 100 LTRS AND IN THE SECOND BILL, THE DIFFERENCED IS 20 0 LTRS. FOR 300 LTRS, THE ASSESSING OFFICER HAS APPLIED RATE OF RS.12.1 PER LTD. THE A PPELLANT ASSESSEE HAS NOT FURNISHED ANY EXPLANATION REGARDING THE DIFFERENCE OF 300 LTRS OF GOODS WHICH WERE ACTUALLY DISPATCHED TO THE PURCHASERS BUT BILL S WERE NOT PREPARED FOR THE SAME. SUCH DISPATCHES WERE MADE IN THE LAST WEEK O F JULY 98. THERE IS NO EVIDENCE AVAILABLE WITH THE APPELLANT ASSESSEE TO P ROVE THAT THE SALE OF THE AFORESAID 300 LTRS WAS RECORDED IN THE BOOKS OF AC COUNT IN THE REGULAR COURSE. IN SUCH CIRCUMSTANCES, ADDITION OF RS.36,000/- MA DE BY THE ASSESSING OFFICER IS CONFIRMED. 5.5.1 NOW COMING TO PAGE NO.173. THE CONTENTS OF T HE DOCUMENTS SHOW THAT THESE ARE DETAILS OF CASH SALES OF MTO TO VARIOUS PARTIES WITHOUT RAISING BILL. THIS FIND GIVEN BY THE ASSESSING OFFICER HAS NOT BE EN CONTROVERTED OR CONTRADICTED, IN ANY MANNER, THE APPELLANT ASSESSEE . THE QUANTITY INVOLVED IS 7600 LTR. THE TRANSACTION PERTAINS TO A PERIOD RUNN ING FROM 15.6.98 TO 26.7.98. THE APPELLANT HAS MAINLY CHALLENGED THE RATE OF RS .12.10 PER LTR APPLIED BY THE ASSESSING OFFICER. HERE ALSO THE APPELLANT HAS FAIL ED TO FURNISH ANY EVIDENCE TO PROVE THAT RATE ADOPTED BY THE ASSESSING OFFICER I S EXCESSIVE. CONSIDERING THESE ASPECTS, THE ADDITION OF RS.91,960/- MADE BY THE A SSESSING OFFICE IS CONFIRMED. I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 11 5.5.2 ON THE BASIS OF DISCUSSION MADE ABOVE, ADDITI ON TO THE EXTENT OF RS.1,27,960/- IS CONFIRMED AND RELIEF ALLOWED IS OF RS.3,680/-. HENCE, THIS APPEAL BEFORE THE TRIBUNAL. 22. AT THE TIME OF HEARING, LD. AR SUBMITTED THAT T HERE IS A MISTAKE IN CALCULATION IN THE ORDERS OF AUTHORITIES BELOW. HE SUBMITTED THAT, THE AO HIMSELF HAS MENTIONED THAT ON THE BASIS OF SEIZED DOCUMENTS I.E. PAGE 172 OF ANNEXURE-A-I, THE BILLS WERE PREPARED FOR LESS QUANTITY AND THE ACTUAL DELIVERY WAS HIGHE R AND THE TOTAL DIFFERENCE COMES TO ONLY 300 LTRS. HE SUBMITTED THAT THE AO HIMSELF HAS APPLIED THE RATE OF RS.12.1 PER LTR AND THEREBY APPLYING THAT RATE SALES FOR THE SAID E XCESS QUANTITY OF 300 LTRS AT THE RATE OF 12.1 PER LTR COMES TO RS.3,630/- BUT THE ADDITI ON AS SUCH MADE BY AO IS RS.36,000/- WHICH HAS ALSO BEEN CONFIRMED BY LD. CIT(A) OF THE SAME AMOUNT WHICH IS FACTUALLY IS NOT CORRECT. THE LD. AR SUBMITTED THAT RELIEF TO T HAT EXTENT MAY BE GIVEN TO THE ASSESSEE I.E. OF RS.32,370/- (RS.36,000-RS.3,630) OUT OF ADDITION OF RS.1,27,960/- SUSTAINED BY LD CIT(A). LD. DR HAS NOT DISPUTED TH E ABOVE MISTAKE IN CALCULATION AND ALSO DID NOT CONTROVERT THE SUBMISSIONS OF LD. AR. 23. WE HAVE CONSIDERED THE ORDERS OF AUTHORITIES BE LOW. WE AGREE WITH LD. AR THAT THERE IS A MISTAKE IN CALCULATION BY THE AUTHORITIE S BELOW IN THE IMPUGNED ORDERS. SINCE ASSESSEE HAS ASKED FOR RELIEF BY TAKING THE CORREC T FIGURES AND WITHOUT DISPUTING THE RATE AND THE QUANTITY AS CONSIDERED BY THE AUTHORIT IES BELOW, WE FIND MERIT IN THE CONTENTION OF LD. AR. ACCORDINGLY, WE DIRECT THAT INSTEAD OF RS.36,000/-, THE SAID ADDITION BE TAKEN AS RS.3,630/- IN RESPECT OF ADDIT ION MADE BASED ON SEIZED DOCUMENT AT PAGE NO.172. THE DETAILS OF WHICH ARE GIVEN HERE INABOVE IN PARA 20 OF THIS ORDER. HENCE, GROUND NO.5 TAKEN BY THE ASSESSEE IS ALLOWE D IN PART. 24. NOW WE TAKE UP THE REMAINING GROUNDS TAKEN BY DEPARTMENT. 25. IN RESPECT OF GROUND NO.1 OF THE APPEAL OF THE DEPARTMENT, THE ASSESSING OFFICER HAS STATED THAT DURING THE COURSE OF SEARCH OPERATI ON, GOLD AND DIAMOND JEWELLERY OF RS.7,58,507/- WAS FOUND. HE HAS STATED THAT OUT OF THE JEWELLERY, ITEMS NOS.18,20 AND 23 DID NOT TALLY WITH THE REPORTS FILED BY ASSE SSEE ALONG WITH WEALTH TAX RETURN AND THE DECLARATION MADE UNDER VDIS 1997, THE VALUE OF WHICH IS A UNDER : ITEM NO.AS VALUATION REPORT DATED VALUE IN RUPEES 18 20 23 30 RS.13,387/ - RS.3,121/- RS.4,368/- RS.861/- TOTAL RS.21,731/ - I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 12 AO HAS STATED THAT THE SOURCE OF ACQUISITION OF TH E SAID JEWELLERY OF RS.21,731/- REMAINED UNEXPLAINED AND ADDED U/S 69B R.W.S.158BB( 2) OF THE ACT AS UNDISCLOSED INCOME OF THE ASSESSEE FOR FINANCIAL YEAR 1998-99. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 26. THE LD. CIT(A) HAS DELETED THE SAID ADDITION AF TER OBSERVING AS UNDER : DURING THE SEARCH OPERATIONS, GOLD AND DIAMOND JEW ELLERY VALUED RS.7,58,507/- WERE FOUND AT THE PREMISES. OWNERSHIP IS NOT IN DIS PUTE. THEY BELONG TO THE APPELLANT. THE APPELLANT WAS A REGULAR ASSESSEE AND HAS FILED WT RETURNS. SHE ALSO HAD DISCLOSED SUCH JEWELLERY IN HER VDS RETUR NS UNDER VDIS 1997. THEY WERE BEFORE THE AO. THE INVENTORY AND THE PARTICULA RS FILED IN THE RETURNS WERE RECONCILED. VALUE DISCLOSED IN RETURNS AND VDIS ARE NOT IN DISPUTE. SPECIFICATIONS OF 4 ITEMS OF JEWELLERIES DID NOT TALLY (PAGE 7 O F THE AO). IT WAS EXPLAINED THAT THERE WAS NO DIFFERENCE IN THE TOTAL WEIGHT AND VAL UE OF ITEM. THE DIFFERENCE IN SPECIFICATIONS WERE DUE TO MAKING AND REMAKING OF T HOSE JEWELLERY ITEMS. IT COULD BE POSSIBLE THAT AT THE TIME OF VDIS EXACT SP ECIFICATIONS WERE NOT WRITTEN. IT COULD BE AN INADVERTENCE ALSO. AGAINST THE VALUE OF RS.7,58,507/- ITEMS VALUED RS.21,731/- DID NOT TALLY) ACCOUNTING TO 2.86% VARI ATION IN SPECIFICATION AND NOT VALUE OR WEIGHT. FIRSTLY, OVERALL WEIGHT AND VALUE TALLYING, THE AO SHOULD HAVE ACCEPTED THAT THERE WAS NO NON DISCLOSURE IN THAT R ESPECT. SECONDLY, LOOKING TO THE SMALLNESS OF THE VALUE SPECIFICATIONS NOT BEING RULED OUT, HE SHOULD HAVE ACCEPTED THAT THERE WAS NO NON DISCLOSURE OF INCOME ON THIS ACCOUNT. THIS CANNOT BE TERMED A REASONABLE ASSESSMENT. HENCE, DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL . 27. AT THE TIME OF HEARING, LD. DR SUBMITTED THAT A O HAS RIGHTLY MADE THE ADDITION AS THE SAID FOUR ITEMS OF JEWELLERY DID NOT TALLY WITH THE SPECIFICATIONS GIVEN IN THE RETURNS OF WEALTH TAX AND DECLARATIONS FILED UNDER VDIS. HOWEVER, HE DID NOT DISPUTE THE FACT THAT THERE WAS NO DIFFERENCE IN THE TOTAL WEIGHT AN D VALUE OF ITEMS. 28. CONSIDERING THE FACTS THAT TOTAL WEIGHT AND VA LUE OF THE JEWELLERY FOUND DURING THE COURSE OF SEARCH AND DISCLOSED IN THE WEALTH T AX RETURNS AND UNDER THE VDIS DECLARATIONS ARE SAME, WE ARE OF THE CONSIDERED VI EW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AFTER OBSERVING THAT IT COULD BE POSSIBLE THAT ITEMS OF VDIS AND EXACT SPECIFICATIONS WERE NOT REPORTED DUE TO INADV ERTENCE PARTICULARLY WHEN THE ASSESSEE HAD DISCLOSED JEWELLERY IN HER VDIS DECL ARATION. IN VIEW OF THE FACT, AS STATED ABOVE AND REASONS GIVEN BY LD.CIT(A) (SUPRA) , WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. HENCE, GROUND NO.1 OF TH E APPEAL TAKEN BY THE DEPARTMENT IS REJECTED. I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 13 29. IN RESPECT OF GROUND NO.4 OF THE APPEAL TAKEN BY DEPARTMENT, THE FINDINGS AS GIVEN BY THE AO IS SUMMARIZED BY THE LD. CIT(A) IN PARA 3.4 OF THE IMPUGNED ORDER AS UNDER : 3.4 THE ASSESSING OFFICER HAS ALSO TREATED AN AMOU NT OF RS.40,416/- AS UNDISCLOSED INCOME OF THE PROPRIETARY CONCERNS OF THE APPELLANT. THE FACT IS THAT THE APPELLANT ASSESSEE CARRIED ON A PROPRIETORSHIP BUSINESS FOR A LIMITED PERIOD OF 4 MONTHS I.E. FROM 1/4/1998. THE PROPRIETORSHIP CON CERN WAS NAMED AND STYLED AS SUNIL CHEMICAL INDUSTRIES. FROM 1/8/1998, THE PROPRIETORSHIP CONCERN WAS CONVERTED INTO A PARTNERSHIP FIRM IN WHICH THE APPE LLANT WAS ALSO A PARTNER. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, TRADING AND PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AS ON 31/7/1998 WERE FILE D. THE ASSESSING OFFICER HAS HELD THAT NO BOOKS OF ACCOUNT OR SUPPORTING DETAILS WERE FILED TO SUPPORT THE VARIOUS CONTENTIONS/ CLAIMS APPEARING IN THE ACCOUN TS. THE GROSS PROFIT WAS SHOWN AT 0.81 % OF THE TOTAL TURNOVER OF RS.1,71,75 ,298/-. THE ASSESSING OFFICER HAS HELD, THAT THE GROSS PROFIT DECLARED IS FAR LES S AS COMPARED, TO THE GROSS PROFIT OF THE OLD FIRM OF THAKKAR FAMILY WITH THE S AME NAME I.E. SUNIL CHEMICAL INDUSTRIES. OLD FIRM HAD DECLARED GROSS PROFIT @2.9 7%. THE ASSESSING OFFICER, THEREFORE, ESTIMATED THE GROSS PROFIT OF THE PROPR IETARY CONCERN AT 2.97%. FURTHER, THE ASSESSING OFFICER HAS HELD THAT IN THE PROFIT AND LOSS ACCOUNT, AN EXPENDITURE OF RS.1,19,992/- IS DEBITED ON ACCOUNT OF INTEREST ON OVERDRAFT. HOWEVER, THE BALANCE AMOUNT OF OVERDRAFT OUTSTANDI NG AS ON 31/7/1998 IS OF RS.5,30,506/-. THE ASSESSING OFFICER OBSERVED THAT CONSIDERING THE QUANTUM OF BALANCE OVERDRAFT, IT IS TO BE MENTIONED THAT THIS INTEREST IS CLAIMED HERE ON PROPORTIONATE BASIS I.E. FOR FOUR MONTHS PERIOD. CO NSIDERING ALL THESE FORCE, THE CLAIM OF INTEREST ON OVERDRAFT IS RESTRICTED TO 15% OF THE BALANCE APPEARING IN THE OVERDRAFT BALANCE SHEET. SUCH INTEREST EXPENSE IS WORKED OUT AT RS.79,576/-. THE EXCESS OF RS.40,416/- IS DISALLOWED AND TREATED AS UNDISCLOSED INCOME OF THE APPELLANT. 30. THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY AND CONTENDED THAT EXISTENCE OF PROPRIETARY CONCERNS WAS FOR THE PERIO D FROM 1/4/1998 TO 31.7.1998. IT WAS CONTENDED THAT THE FIRM SUNIL CHEMICAL INDUSTR IES DEALT WITH PETROCHEMICAL PRODUCTS HAVING HIGHER MARGIN AND WHEREAS THE NEW FIRM IN WHICH THE ASSESSEE WAS A PARTNER ONLY FOR FOUR MONTHS WERE DEALING IN PETROP RODUCTS. AO COMPARED UNLIKE PRODUCTS AND COMPARED GP OF THE ASSESSEE FIRMS OF 0 .81% AS AGAINST GP OF THE EARLIER FIRM WHICH WAS 2.9%. THE ASSESSEE HAS ALSO STATED THAT THE GP OF THE ASSESSEES FIRM IS OF 2.9% OF THE TOTAL TURNOVER IF THE TRADING A ND PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE ARE CONSIDERED AND THE DISCOUNT GIVEN BY SUPPLIER BE ALSO TAKEN NOTE OF. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE HAS DELETED THE ADDITION MADE BY AO VIDE PARA 5.4 OF THE IMPUGNED ORDER WHICH RE ADS AS UNDER : 5.4 INCOME FROM PROPRIETARY CONCERN : AFTER CONSIDERING THE FACTS OF THE CASE AM THE IMPUGNED ASSESSMENT ORDER, IN MY CONSIDERED OPINION, THERE IS NO JUSTIFICATION TO MAKE ANY ADDITION ON ACCOUNT OF AN Y UNDISCLOSED INCOME IN CONNECTION WITH THE BUSINESS OF THE PROPRIETARY C ONCERN WHICH LASTED ONLY FOR 4 MONTHS I.E. 1/4/98 TO 31/7/98. THE GROSS PROFIT RA TE OF 2.97% APPLIED BY THE ASSESSING OFFICER IS WITHOUT ANY BASIS. THE ASSESSI NG OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE ACCOUNTS OF THE PROPRIETARY CONCERN. THERE IS NO FINDING I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 14 THAT THE EXPENSES CLAIMED WERE NOT GENUINE OR WERE BOGUS OR INFLATED OR WERE INCURRED FOR ANY PURPOSE OTHER THAN BUSINESS PURPO SE. IN SUCH CIRCUMSTANCES, THE BOOK RESULT DECLARED BY THE PROPRIETARY CONCERN CANNOT BE DISBELIEVED. IN FACT, THERE IS NO EVIDENCE, INFORMATION OR MATERIA L AVAILABLE WITH THE ASSESSING OFFICER ON THE BASIS OF WHICH ANY DOUBT CAN BE RAIS ED REGARDING THE CORRECTNESS OF THE BOOKS OF ACCOUNT OF THE PROPRIETARY CONCERN. SO FAR AS THE INTEREST EXPENSE IS CONCERNED, THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING THAT THE OVERDRAFT FULLY OR PARTLY WAS UTILIZED BY THE APPEL LANT FOR ANY PURPOSE OTHER THAN HER BUSINESS PURPOSES. IN ABSENCE OF SUCH FINDING, NO DISALLOWANCE CAN BE MADE OUT OF INTEREST EXPENSES. THE BASIS ADOPTED BY THE ASSESSING OFFICER TO WORK OUT THE ADMISSIBLE INTEREST EXPENSE IS NOT AT ALL WELL FOUNDED. OUTSTANDING LIABILITY ON THE LAST DAY OF THE ACCOUNTING PERIOD IS NO PARAMET ER TO WORK OUT THE ADMISSIBLE INTEREST EXPENSE. ONE HAS TO SEE THE ACTUAL WORKING ON THE BASIS OF THE UTILIZED OVERDRAFT FACILITY ON DAY TO DAY BASIS AND OVER THE TIME FRAME UNDER CONSIDERATION. THERE IS SUBSTANCE IN THE SUBMISSION MADE BY THE COUNSEL THAT AFTER CONSIDERING THE DISCOUNT RECEIVED, THE GROSS PROFIT WORKS OUT AT 3.08% AS AGAINST 2.90% ESTIMATED BY THE ASSESSING OFFICER. T HE ASSESSING OFFICER SHOULD HAVE SEEN THE TOTAL GROSS PROFIT GENERATED BY THE A PPELLANT. DISCOUNT RECEIVED BY THE APPELLANT IS LINKED WITH THE TRANSACTIONS OF PU RCHASE AND SALE. THEREFORE, IT SHOULD BE CONSIDERED FOR THE PURPOSE OF ASCERTAININ G THE GROSS PROFIT. IN VIEW OF THE DISCUSSION MADE ABOVE, IN MY OPINION, NO ADDITI ON OF ANY UNDISCLOSED INCOME CAN BE MADE ON ACCOUNT OF THE RECORDED BUSINESS TRA NSACTIONS OF THE PROPRIETARY CONCERN OF THE APPELLANT CONCERN. IT IS, THEREFORE, DELETED. HENCE, DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL . 31. AT THE TIME OF HEARING, LD DR RELIED ON THE ORD ER OF AO AND WHEREAS THE LD. AR RELIED ON THE ORDER OF LD. CIT(A). 32. CONSIDERING THE REASONING GIVEN BY LD. CIT(A) AND IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD BY LD. DR AND / OR DISPUTING THE CONTENTS OF THE FACTS AS STATED BY ASSESSEE BEFORE LD. CIT(A) AND TAKEN NOTE OF BY LD. CIT(A) IN THE IMPUGNED ORDER, WE DO NOT FIND ANY REASON TO INTERF ERE WITH HIS ORDER. ACCORDINGLY, WE UPHOLD ORDER OF LD. CIT(A) BY REJECTING GROUND NO.4 OF THE APPEAL TAKEN BY DEPARTMENT. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND WHEREAS THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27 TH NOVEMBER, 2013 + 3 4 27 TH NOVEMBER, 2013 + SD SD ( / SANJAY ARORA) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: ON THIS 27 TH DAY OF NOVEMBER, 201 3 I.T(SS).A. NO.494/MUM/2004 I.T(SS).A. NO.506/MUM/2004 15 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT 2. ) ( / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- CONCERNED 4. 8 / CIT CONCERNED 5. 9 )# , / # , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) / # , /ITAT, MUMBAI