Shri Gulam Mohammed Liakat Ali, Vadodara. V. The Dy.CIT., Circle-8, Vadodara.

ITSSA 78/AHD/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8574 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-07-2010
• Assessment Year: misc
• Appeal Filed On: 22-03-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LD SSHRI RAJEEV AGARWAL
• Assessee Lawyers: LD A R MS URVASHI SHODHAN
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Search and seizure; Salary income; Source of fund; Retrospective amendment; Corroborative evidences; Block assessment
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 20/07/2010 DRAFTED ON: 22 /07/2010 IT(SS)A NO.78/AHD/2004 BLOCK PERIOD : 01/04/1999 TO 17/08/2000 SHRI GULAM MOHAMMED LIAKAT ALI 302, HAMPTON SQUARE FATEHGUJ VADODARA 390 002 VS. THE DCIT CIRCLE-8 VADODARA. PAN/GIR NO. : ABLPG 0543 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : LD.A.R.MS. URVASHI SHODHAN, RESPONDENT BY: LD.CIT(DR)S/SHRI RAJEEV AGARWAL & SHRI ANIL KUMAR. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-V BARODA DAT ED 29 TH JANUARY- 2004 PASSED FOR BLOCK PERIOD 01/04/1990 TO 17/08/ 2000. 1.1) NUMBER OF GROUNDS HAVE BEEN RAISED, HOWEVER, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE MS. URVAS HI SHODHAN HAS PLACED A GROUND-WISE CHART BEFORE US WHICH SHALL BE FOLLOWED FOR DECIDING THE GROUNDS AS FOLLOWS :- IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 2 - 2.) GROUND NOS.1 & 2 ARE STATED TO BE GENERAL GROUNDS NEED NO LEGAL ADJUDICATION, THEREFORE, DISMISSED BEING NOT PRESSE D. 3.) GROUND NO.3 REPRODUCED BELOW: 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.5,55,195/- TREATING THE SALARY INCOME AS INCOME FROM UNDISCLOSED SOURCES. 3.1.) FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING A SSESSMENT ORDER PASSED U/S.158BC OF THE I.T. ACT, 1961 DATED 27/06 /2002 WERE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S.13 2 OF THE I.T. ACT, 1961 ON 17/08/2000 IN CONSEQUENCE A SEARCH OPERATION AT APAR GROUP OF INDUSTRIES, BOMBAY/VADODRA. THE ASSESSEE IS STATE D TO BE A GENERAL MANAGER (SALES & PURCHASE) PLACED AT VADODARA. IN COMPLIANCE OF A SHOW-CAUSE NOTICE U/S.158BC OF THE I.T. ACT, 1961 T HE ASSESSEE HAS FURNISHED A RETURN OF INCOME FOR THE BLOCK PERIOD 0 1/04/1990 TO 17/08/2000 DISCLOSING THEREIN UNDISCLOSED INCOME O F RS.53 LACS. PERTAINING TO THE ABOVE GROUND, THE OBSERVATION OF THE ASSESSING OFFICER WAS THAT FOR THE ASSESSMENT YEARS 19991-92 TO 1997- 98, THE APPELLANT HAD NOT FILED THE RETURNS OF INCOME IN THE REGULAR COURSE. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE WAS LIABLE TO TAX B ECAUSE THE INCOME HAD EXCEEDED THE PRESCRIBED TAXABLE LIMIT, BUT NO RETUR N WAS FILED. BY NARRATING THIS, THIS PRIMARY FACT THE ASSESSING OFF ICER HAS COMMENTED THAT THE INCOME EARNED BY THE ASSESSEE HAD, THEREFORE, F ALLEN IN THE CATEGORY OF UNDISCLOSED INCOME (UDI). FOR THIS PERIOD, I.E. ASSESSMENT YEARS 1991-92 TO 1997-98, TOTAL SALARY INCOME WAS AT RS.5 ,55,195/-. SINCE THE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 3 - ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THEREF ORE, A SHOW-CAUSE NOTICE WAS ISSUED FOR THE REASON AS TO WHY THE SAID SALARY INCOME BE NOT TREATED AS UDI OF THE ASSESSEE. IN COMPLIANCE, THE ASSESSEE HAS MADE SUBMISSION IN HIS DEFENSE WHICH CAN BE SUMMARIZED A S FOLLOWS: (I) ASSESSEES FIRST DEFENSE WAS THAT THE SALARY INCOME SHOULD NOT BE HELD AS UDI ON ACCOUNT OF A DECISION OF THE HON' BLE TRIBUNAL PRONOUNCED IN THE CASE OF SALVI DIVAKAR SHANKAR VS. ACIT ITAT REPORTED AS (2000) 66 TTJ (PUNE) 698. (II) ASSESSEES SECOND DEFENSE WAS THAT THE SALAR Y INCOME WAS SUBJECT TO TDS, THEREFORE, THERE WAS NO INTENTION T O EVADE THE TAX. SURENDRA KUMAR LAHOTI 300 ITR 124 (MP) (III) ASSESSEES THIRD DEFENSE WAS THAT THE EMPLOY ER HAD ALREADY SUBMITTED A RETURN OF TAX DEDUCTION FROM SALARY U/S .206 OF THE I.T. ACT, 1961 WHICH TANTAMOUNT TO DISCLOSURE OF RELEVAN T MATERIAL FACTS TO THE REVENUE DEPARTMENT INCLUSIVE OF THE SALARY D ETAILS OF THIS ASSESSEE. CIT VS. ASKKOK TAKSALI 124 TAXMAN 45 (RA J.) 3.2.) THE ASSESSING OFFICER WAS NOT CONVINCED AND REJECT ED THE ABOVE SUBMISSIONS PRIMARILY ON THE GROUND THAT A DISCLOSU RE AS PER SECTION 206 OF THE ACT HAD NOTHING TO DO WITH THE RESPONSIBILIT Y OF A TAX-PAYER TO FILE AN INCOME-TAX RETURN AS PRESCRIBED UNDER THE PROVIS IONS O F SECTION 139 OF THE I.T. ACT, 1961. BY FILING AN ANNUAL RETURN A S PER SECTION 206 OF THE I.T. ACT, 1961 BY AN EMPLOYER DID NOT MEAN THAT THE INCOME HAS BEEN IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 4 - DISCLOSED BY THIS ASSESSEE. THEREAFTER, THE ASSES SING OFFICER HAS COMPUTED THE SALARY INCOME ON YEAR-WISE BASIS AND T HE AMOUNT OF TDS WAS ALSO ACKNOWLEDGED. THE TOTAL UDI IS, THEREFOR E, FOR ASSESSMENT YEARS 1991-92 TO 1997-98 WAS COMPUTED AT RS.5,55,19 5/- WHICH WAS TAXED IN THE HANDS OF THE ASSESSEE. THE MATTER WA S CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(APPEAL S) HAS CONSIDERED THE REPORT OF THE ASSESSING OFFICER AND ALSO ACCEPTED T HE FACT THAT THE ANNUAL TDS RETURN IN FORM NO.24 U/S.206 OF THE I.T. ACT, 1 961 HAD BEEN FILED BY M/S. APAR INDUSTRIES LTD., WHEREIN THE DETAILS OF T HE SALARY AND TDS OF EMPLOYEES WERE MENTIONED. ACCORDING TO HIM, IT WAS NOT A DISCLOSURE OF SALARY INCOME AS PRESCRIBED U/S.139(1) OF THE I.T. ACT, 1961 BY THE ASSESSEE. IT HAS ALSO BEEN MENTIONED BY THE LEARN ED CIT (APPEALS) THAT THE DECISION OF SALVI DIVAKAR SHANKAR (SUPRA) WAS RENDERED IN RESPECT OF CERTAIN ISSUES PRIOR TO THE AMENDMENT MADE BY THE F INANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 01/07/1975. HE HAS CONCLUDED THAT IN THE ABSENCE OF ANY SPECIFIC PROVISION THE SALARY INCOME , THOUGH SUBJECTED TO TDS, HAD TO BE TREATED AS DISCLOSED INCOME. IT WAS HELD THAT FOR THE PURPOSE OF BLOCK PERIOD THE UNDISCLOSED SALARY INCO ME WAS CORRECTLY TAXED AS UDI BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE. 3.3) FROM THE SIDE OF THE ASSESSEE, THE LEARNED AUTHORI SED REPRESENTATIVE OF THE ASSESSEE MS. SHODHAN HAS PLAC ED STRONG RELIANCE ON FEW DECISIONS, NAMELY: SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. SALVI DIVAKAR SHANKAR VS. ASST.CIT (2000)66 TTJ 698 (PUNE) 2. JT.CIT VS. DR.(SMT.REETA (2002)80 ITD IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 5 - SINGH 503(PAT) 3. CIT VS. ASHOK TAKSALI (2002)257ITR352RAJ 4. D R ARORA 178 TAXMAN 81 (DEL.) 3.4) THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSES SEES MAIN PLANK OF ARGUMENT WAS THAT ONCE THE ALLEGED SALARY INCOME HAD NOT FALLEN UNDER THE CATEGORY OF UDI AS DEFINED U/S.158B(B) OF THE I.T. ACT, 1961, THEREFORE, THE SAME SHOULD NOT HAVE BEEN CHARGED UN DER THE PROVISIONS OF CHAPTER XIV-B OF THE I.T. ACT, 1961. DURING HERE ARGUMENTS, A QUERY HAS BEEN RAISED BY THE BENCH THAT WHY THE PROVISION S OF SECTION 158BB OF THE I.T. ACT, 1961 SHOULD NOT BE APPLICABLE FOR THE PURPOSES OF COMPUTATION OF UDI OF THE BLOCK PERIOD MORE PARTICU LARLY WHEN IT WAS PRESCRIBED THAT WHERE THE DUE DATE FOR FILING OF RE TURN HAS EXPIRED, BUT NO RETURN OF INCOME HAS BEEN FILED, THEN NO CREDIT O R SET OFF OF SUCH INCOME BE GIVEN AGAINST THE AGGREGATE OF THE TOTAL INCOME WHICH WAS COMPUTED AS A RESULT OF INCRIMINATING MATERIAL OR INFORMATIO N GATHERED BY THE REVENUE DEPARTMENT CONSEQUENT UPON THE SEARCH OPE RATION. LD. A.R. HAS RESPONDED THAT AS PER SEC. 158BB(C)(A)(B) ONCE THE SAID INCOME WAS IN THE KNOWLEDGE OF THE REVENUE DEPARTMENT THEN IT HAD TO REDUCED FROM THE AGGREGATE OF THE UDI. IN SHORT, LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE HAS REPLIED THAT THE MAIN CHARGING SECTION, I.E. DEFINITION OF UNDISCLOSED INCOME U/S 158B (B) PROTECTS THIS ASSESSEE AND SECONDLY, THE ISSUE OF APPLICABILITY OF SECTION 158 BB (1)(C) OF THE I.T. ACT, 1961 HAS ALSO BEEN TAKEN INTO ACCOUNT BY RESPE CTED MADRAS HIGH COURT IN THE CASE OF CIT VS KERALA ROADWAYS LTD. 32 2 ITR 609 ORDER DATED 5 TH JAN. 2010. AND THEREAFTER HELD THAT ONCE AN INCOME WAS IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 6 - SUBJECTED TO TDS, THEREFORE, SHOULD NOT TANTAMOUNT TO AN UNDISCLOSED INCOME OF THE ASSESSEE. 3.5) FROM THE SIDE OF THE REVENUE, SHRI RAJEEV AGARWAL, LEARNED DEPARTMENTAL REPRESENTATIVE APPEARED AND PLACED STR ONG RELIANCE ON THE FINDINGS OF THE ASSESSING OFFICER AND LEARNED CIT ( APPEALS). MR. AGARWAL HAS ALSO CITED SMT. JYOTI M. BHANDARI 6 SOT 375 (AHD.) IN ADDITION TO WHATEVER HAS BEEN STATED BY THE HON'BLE COURTS, SHRI RAJEEV AGARWAL, CIT-DR HAS ALSO RAISED AN INTERESTING ARGU MENT THAT BY NON- DISCLOSURE OF AN INCOME IN THE REGULAR COURSE BY AN ASSESSEE, ON THE PRETEXT THAT THE SAID INCOME HAPPENED TO BE SUBJECT TO TDS MUST NOT BE HELD AN EXCUSE FOR NOT TREATING THE SAID INCOME AS UNDISCLOSED INCOME OF THE SAID ASSESSEE. HE HAS CITED AN EXAMPLE THA T IF AN EMPLOYEE HAS TWO SALARY SOURCES FROM TWO DIFFERENT EMPLOYERS AND EACH ONE OF THEM IS DEDUCTING TDS AS PER THE PRESCRIBED RATE INDEPENDEN TLY ON THE SALARY PAYMENT BUT AFTER ADDING BOTH THE SALARY AMOUNTS, T HE RATE OF TAX IF GONE HIGH AND IF FALLEN ON THE HIGHER TAX BRACKET, THEN SUCH A TAX-PAYER MUST NOT TAKE A PLEA THAT PROPER TAX HAS BEEN PAID. IN THIS SITUATION, ACCORDING LEARNED DEPARTMENTAL REPRESENTATIVE, THE TDS OUGHT TO BE INADEQUATE AND IF A RETURN WOULD BEEN FILED, THEN SUCH A TAX-P AYER OUGHT TO PAY BALANCE AMOUNT OF TAX. COMPARING THE FACTS OF THE P RESENT APPEAL, THE LEARNED CIT DEPARTMENTAL REPRESENTATIVE HAS ARGUED THAT THIS ASSESSEE HAS OTHER UDI (UNDISCLOSED INCOME) IN ADDITION TO T HE SALARY INCOME, THEREFORE, BY NOT FILING THE RETURN IN DUE COURSE, HE HAD EVADED THE TAX ON THE SALARY WHICH WAS SUBJECT TO TDS BECAUSE THE TOT AL RATE OF TAX BY INCLUDING THE ALLEGED SALARY INCOME MUST HAVE GONE AT A HIGHER RATE OF TAX IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 7 - BRACKET. BY NOT FILING THE RETURN OF SALARY INCOM E THIS TAX-PAYER HAS NOT PAID THE ADEQUATE RATE OF TAX ON THE SALARY INCOME, THEREFORE, SUCH SALARY INCOME MUST BE HELD AS UDI OF THE ASSESSEE. LD. C IT (DR) MR. ANIL KUMAR HAS CITED DR.BRIJESH LAHOTI 282 ITR 349 ( MP) , ORDER DATED 13 TH DEC.2005. LD. MR. KUMAR HAS CONCLUDED THAT IF THE T OTAL TAX ON THE TOTAL UDI EMERGING FROM THE SEIZED MATERIAL HAS FAR EXCEE DED THE RATE OF TAX COMPARING THE RATE OF TAX AS PER TDS PROVISIONS, TH EN THE ENTIRE AGGREGATE AMOUNT INCLUSIVE OF SALARY INCOME IS NOTH ING BUT UDI. 3.6) WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE H AVE CAREFULLY PERUSED THE RELEVANT PROVISIONS OF THE ACT IN THE L IGHT OF THE FACTS OF THIS CASE AND THE MATERIAL PLACED ON RECORD. ADMITTEDLY, THE ASSESSEE IS A SALARIED EMPLOYEE BEING A GENERAL MANAGER OF M/S. A PAR INDUSTRIES LTD. THERE IS NO DENIAL OF THIS FACT THAT THE IMPUGNED S ALARY INCOME WAS SUBJECT TO TDS BY THE EMPLOYER. IT IS ALSO AN ADM ITTED POSITION THAT FOR THE RELEVANT ASSESSMENT YEARS THIS ASSESSEE HAS NOT FILED THE INCOME-TAX RETURN AS PER THE PROVISIONS OF SECTION 139 OF THE I.T. ACT, 1961. RELIANCE PLACED ON DCIT VS. LANCELOT L. LOBO 151 TAXMAN 34 (MUM.) AN ANOTHER FACT HAS ALSO NOT BEEN DENIED THAT THE EMPL OYER, I.E. M/S. APAR INDUSTRIES LTD. HAD FURNISHED THE DETAILS OF THE SA LARY AND TDS THEREUPON OF THE EMPLOYEES U/S.206 OF THE I.T. ACT, 1961 ANNU AL ON FORM NO.24 AS PER RULES. THIS ACTION OF THE EMPLOYER WAS IN THE NORMAL COURSE OF BUSINESS TO FOLLOW THE PROCEDURE PRESCRIBED UNDER T HE STATUTE, HENCE, TAKEN THAT STEP BEFORE THE SEARCH ACTION CARRIED OU T ON THE ASSESSEE. STILL IT IS BETTER TO MENTION, THAT A CERTIFICATE FROM M/ S. APAR INDUSTRIES LTD. EVIDENCING DETAILS OF FORM NO.24 AND DETAILS OF TDS , PERTAINING TO THE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 8 - BLOCK PERIOD UNDER ASSESSMENT, WAS NOT ONLY BEFORE THE REVENUE AUTHORITIES BUT ALSO BEFORE US IN THE COMPILATION F ILED. WITH THIS BACKGROUND, WE HAVE EXAMINED THE DEFINITION OF UND ISCLOSED INCOME PRESCRIBED UNDER SECTION 158B(B) OF THE I.T. ACT, 1 961. WE ARE PRESENTLY CONCERNED WITH THE TERMS AS PER THE DEFIN ITION OF UNDISCLOSED INCOME, QUOTE REPRESENTS WHOLLY AND PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT, UNQUOTE. THIS LANGUAGE HAS BEEN DISCUSSED AT LENGT H BY RESPECTED CO-COORDINATED BENCHES AS ALSO BY RESPECT ED HIGH COURTS AND THEN ALMOST IN A UNANIMOUS MANNER IT WAS HELD THAT ONCE AN INCOME IS SUBJECT TO TDS AND THAT INCOME HAS BEEN IN THE K NOWLEDGE OF THE REVENUE DEPARTMENT BY FURNISHING THE REQUISITE ANNU AL FORMS, THEN SUCH AN INCOME CANNOT BE SAID TO BE AN INCOME WHICH WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT . RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KER ALA ROADWAYS LD. 322 ITR 609 DATED 5 TH JAN.2010, RELEVANT HEAD-NOTE IS REPRODUCED BELOW ;- (2010) 322 ITR 609 (MAD) COMMISSIONER OF INCOME TAX VS. KERALA ROADWAYS LTD., A SEARCH WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON JANUARY 22, 2003. THE ASSESSEE FILED ITS RETURN FOR THE ASSESSMENT YE AR 2002-03 ONLY ON MARCH 12, 2004. AFTER GIVING CREDIT FOR TAX DEDUCTED AT SOURCE, ADV ANCE TAX AND SELF-ASSESSMENT TAX THE ASSESSING OFFICER TREATED THE BALANCE AS UNDISCLOSE D INCOME. THE COMMISSIONER (APPEALS) HELD THAT THE AMOUNT COULD NOT BE TREATED AS UNDISC LOSED INCOME AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE AMOUNT SHOWN IN THE RETURN COULD NOT BE TREATED AS UNDISCLOSED INCOME FOR PURPOSES OF BLOCK ASSESSMENT. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 9 - ACIT V. A.R. ENTERPRISES (200) 274 ITR 110(MAD.) A PPLIED. ACIT V A.R. ENTERPRISES (2005) 274 ITR 110(MAD) (PA RAS 8, 9, 10) AND NOORSINGH (B) V UNION OF INDIA (2001) 249 ITR 378 (MAD) (PARA -9) REFERRED TO. 3.7) AS FAR AS THE QUESTION OF COMPUTATION OF THE UDI IS CONCERNED AS PRESCRIBED U/S.158BB(1) OF THE I.T. ACT, 1961, THE THRUST OF THE ARGUMENT IS THAT ONCE AN INCOME IS OUT OF THE DEFINITION OF UNDISCLOSED INCOME U/S 158B(B) OR NO CHARGING SECTION COULD BE APPLIED ON THIS NATURE OF INCOME, THEN AUTOMATICALLY REST OF THE COMPUTATION SECTIONS WERE NOT TO BE CONSIDERED AND THEREFORE SUCH AN INCOME IS TOTAL LY BEYOND THE SCOPE OF SECTION 158BB OF THE I.T. ACT, 1961. WE FIND SOM E FORCE IN THIS ARGUMENT OF LEARNED AUTHORISED REPRESENTATIVE OF TH E ASSESSEE, HOWEVER, WITHOUT DELIBERATING UPON MUCH IN DETAIL, THE ISSUE BEING SETTLED, WE CAN SIMPLY FOLLOW FEW DECISIONS VIZ. K ERALA ROADWAYS 322 ITR609; CIT VS. ASHOK TAKSALI 257 ITR 352 ( RAJ.); SURENDRA KUMAR LAHOTI 300 ITR 124 ( M.P.). IN THESE DECISIONS THE LATEST AMENDED PROVISIONS WERE DULY TAKEN CARE AND THEREUPON IT W AS HELD THAT AN INCOME WHICH IS SUBJECT TO TDS IS OUT OF THE AMBITS OF THE UDI, THEREFORE, THE PROVISIONS OF SECTION 158BB(C)(A) OR (B) OR (CA) OF THE I.T. ACT, 1961 WOULD NOT APPLY. AS FAR AS THE QUESTION O F IMPACT OF TAX ON SUCH AN UDI AS RAISED BY THE LD. DR IS CONCERNED, T HE SAME HAS ALSO BEEN ANSWERED IN THE CASE OF ASHOK TAKSALI (SUPRA) THAT THERE IS NO QUESTION OF ANY ACCOMMODATION OF TAX DEDUCTED AT SO URCE AGAINST ANY OTHER INCOME WHEN SALARY INCOME HAS NOT BEEN TAXED IN THE BLOCK YEAR. AS PER THIS LOGIC THE TAX ON THE UDI IS A SEPARATE TAX TO BE CALCULATED INDEPENDENTLY AND HAS NO EFFECT IF A TDS HAS BEEN D EDUCTED HENCE THE PORTION OF INCOME WHICH MATCHES WITH THE TDS AMOUNT IS TO BE ONLY EXCLUDED FROM THE TOTAL UDI DETERMINED ON THE BASIS OF THE INCRIMINATING IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 10 - EVIDENCES. THESE DECISIONS THUS GIVE US A GUIDELI NE THAT THE IMPUGNED INCOME NOW UNDER DISPUTE SHOULD NOT BE HELD AS A UD I FOR THE PURPOSES OF PROVISIONS OF CHAPTER XDIV-B OF THE I.T. ACT, 19 61. WE HOLD ACCORDINGLY AND DIRECT TO GIVE NECESSARY RELIEF TO THE APPELLANT. GROUND ALLOWED. 4.) GROUND NO.4 THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS B Y DIRECTING THE A.O. TO LEVY SURCHARGE ON THE TAX DETERMINED. 4.1.) AT PRESENT THE LEVY OF SURCHARGE ON UDI IS SETTLED IN FAVOUR OF THE REVENUE BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SURESH N. GUPTA REPORTED AS (2008) 297 ITR 332 AND IN THE CA SE OF CIT VS. VATIKA TOWNSHIP (P) LTD. REPORTED AS (2009)314 ITR 338. FOLLOWING THESE DECISIONS, WE HEREBY DISMISS THE GROUND RAISE D BY THE ASSESSEE. 5.) GROUND NO.5 REPRODUCED BELOW:- 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.16,005/- BEING EQUIVALENT OF VARIOUS FOREIGN CURRENCIES. 5.1.) THE ASSESSING OFFICER HAS NOTICED THAT THIS ASSESS EE WAS FOUND IN POSSESSION OF FOREIGN CURRENCY AS FOLLOWS:- RIALS (IRAN) - 24,000 DIRHAM (UAE) - 1,335 BIRR (ETHOPIA) - 3 DINNAR - 6 BAISA (OMAN) - 300 DOLLAR (USA) - 12 IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 11 - 5.2.) THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCE REG ARDING SOURCE OF PURCHASE OF THE AFOREMENTIONED FOREIGN CURRENCIE S OF DIFFERENT COUNTRIES. IT WAS REPLIED THAT THE SAID CURRENCY WAS PURCHAS ED FORM THE AMOUNT GIVEN BY THE EMPLOYER-COMPANY FOR GOING ABRO AD FOR BUSINESS PURPOSE OF THE COMPANY AND ON RETURN FROM THE FOREI GN TOURS THE UNUTILIZED BALANCE FOREIGN CURRENCY WAS AVAILABLE W ITH THE ASSESSEE. THE ASSESSING OFFICER WAS NOT CONVINCED AND HELD THAT T HE FOREIGN CURRENCY IF AT ALL REMAINED WITH THE ASSESSEE AS A SURPLUS, THE N ALSO IT WAS THE INCOME OF THE ASSESSEE AND SINCE IT WAS NOT DISCLOSED, HEN CE, UDI FOR THE BLOCK PERIOD. 5.3.) WHEN THE MATTER HAD GONE BEFORE THE LEARNED CIT(AP PEALS), VIDE PARAGRAPH NO.6.4 THE ACTION OF THE ASSESSING OFFICE R WAS AFFIRMED AS FOLLOWS:- 6.4. I HAVE CONSIDERED THE SUBMISSIONS MADE AND A RGUMENTS PUTFORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE ARGUMENTS OF JCITS AND AO ARE ALSO CONSIDERED. THE CONTENTI ON OF THE APPELLANT CANNOT BE ACCEPTED THAT THE SAME WERE BAL ANCE OF UNUTILIZED AMOUNT OF FOREIGN TRIPS. THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE ITS PLEA BY ANY DOCUMENTARY EV IDENCE THAT THE SAME WERE LEGALLY TO BE HELD WITH THE APPELLANT. IF THE EMPLOYER HAS ALLOWED TO PURCHASE AND INCUR THE FOREIGN TOUR EXPENSES , THE APPELLANT WAS DUTY BOUND TO RETURN THE SAME TO THE EMPLOYER OR TO DEPOSIT THE SAME WITH THE CONCERNED AUTHORITIES OR THE FOREIGN EXCHANGE DEALER. THE APPELLANT CANNOT HAVE ANY RIGHT TO RETAIN SUCH FOREIGN CURRENCY WITH HIM AND THE SAME HAS BEEN RIGHTLY TREATED AS UNEXPLAINED INVESTMENT OF THE APPELLANT AND ADDED AS UNDISCLOSED INCOME DURING THE BLOCK PERIOD. THE AD DITION MADE OF RS.16,005 IS THEREFORE, SUSTAINED. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 12 - 5.4.) WE ARE NOT MUCH CONVINCED BY THE PLEADING OF LEARN ED AUTHORISED REPRESENTATIVE OF THE ASSESSEE PRIMARILY BECAUSE OF THE REASON THAT IF AT ALL THE ASSESSEES FOREIGN TRIPS WERE FINANCED BY H IS EMPLOYER, THEN NATURALLY ON HIS RETURN EITHER HE HAS TO RETURN THE SURPLUS ALLOWANCE OR HE HAS TO RETURN THE SAME TO THE AUTHORIZED FOREIGN CU RRENCY DEALER AS PER LAW. RATHER, VIDE A CERTIFICATE PLACED ON PAGE 11 6 OF THE PAPER-BOOK, THE ASSESSEE HIMSELF HAS AFFIRMED THAT ON RETURN FROM F OREIGN TRAVEL IF THERE WAS ANY BALANCE LEFT WITH HIM, THE SAID FOREI GN CURRENCY WAS EXPECTED TO BE RETURNED TO THE AUTHORITIES DEALER. AS PER THIS CERTIFICATE, THE BALANCE WHICH WAS RETURNED WAS 2950 U.S. DOLLARS . THIS CERTIFICATE SAYS THAT THE ASSESSEES FOREIGN TRAVEL EXPENSES WERE AS PER THE DATE-WISE DETAILS, WHICH WERE REIMBURSED BY THE COMPANY . EVEN OTHERWISE, IF AN ALLOWANCE, I.E. PRESENTLY TRA VEL ALLOWANCES GRANTED BY AN EMPLOYER HAS NOT BEEN SPENT OR EXPENDED BY AN EMPLOYEE, THEN THE SURPLUS IF ANY LEFT WITH THE ASSESSEE HAS TO BE HEL D AS INCOME OR A PERQUISITE IN THE HANDS OF A SALARIED EMPLOYEE. D UE TO THIS REASON, WE ARE OF THE VIEW THAT THE REVENUE AUTHORITIES HAVE C ORRECTLY TAXED THE SAME AS UDI BEING UNEARTHED CONSEQUENT UPON THE SEA RCH OPERATION. THEREFORE, THIS GROUND IS DISMISSED. 6 ) GROUND NO.6 REPRODUCED BELOW:- 6. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ADDITION OF RS.64,043/- ON ACCOUNT OF HOUSEHOLD EXPENSES . 6.1.) WHILE PERUSING THE ASSESSMENT ORDER IT IS EVIDENCE D THAT THE ASSESSING OFFICER HAS ESTIMATED THE HOUSE-HOLD EXPENSES FOR THE ENTIRE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 13 - BLOCK PERIOD WITHOUT MENTIONING THE BASIS OF THE SAID ESTIMATION THOUGH HE WAS COMPUTING THE UDI OF THE ASSESSEE AS PER THE PROVISIONS OF CHAPTER XIV-B OF THE I.T. ACT, 1961. MEANING THERE BY THAT THE ASSESSING OFFICER OUGHT TO HAVE DETERMINED THE HOUS E-HOLD EXPENSES OF THE ASSESSEE BASED UPON THE SEIZED MATERIAL OR ANY INCRIMINATING EVIDENCES FOUND DURING THE COURSE OF SEARCH. 6.2) WHEN THE MATTER HAD GONE BEFORE THE LEARNED CIT (A PPEALS) THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY AD OPTING AN OVERALL VIEW THAT THE ASSESSING OFFICER WAS JUSTIFIED IN ES TIMATING THE HOUSE-HOLD EXPENSES. 6.3) WE FIND FORCE IN THE ARGUMENT OF THE LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE THAT ONCE THE ASSESS EE WAS SUBJECTED TO SEARCH ACTION, THEN THE ADDITION SHOULD BE BASED UP ON SOME SEIZED MATERIAL AND IN THE ABSENCE OF THE SAME IT WAS NOT FAIR TO ESTIMATE THE HOUSEHOLD EXPENSES. WE ALSO FIND FORCE IN THIS ARG UMENT OF LD. MS. URVASHI SHODHAN , LD. A. R, PRIMARILY BECAUSE OF TH E REASON THAT THERE IS NO MENTION OF ANY INCRIMINATING MATERIAL, SUCH AS, SCHOOL-FEES, BILLS OF LAVISH EXPENDITURE, EXPENDITURE ON CLUB MEMBERSHIP, ETC. RELIANCE PALCED ON ITAT C BENCH ORDER DATED 4.1.2008 IN THE CASE OF SRI NAGINBHAI C. PATEL ITA NOS. 3056 TO 3062/AHD./2007 WHEREIN IT WAS OBSERVED, THE A.O. SHOULD HAVE INVESTIGATED THE MATTER FURTH ER AND SHOULD HAVE BROUGHT ON RECORD CLINCHING EVIDENCE TO SHOW T HAT THE DRAWINGS SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENSES WAS NO T SUFFICIENT TO MEET THE HOUSE EXPENSES. IN ABSENCE OF ANY SUCH EVI DENCE, IN OUR IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 14 - CONSIDERED OPINION , THE ADDITIONS MADE CANNOT BE S USTAINED IN LAW. IN THE ABSENCE OF A DIRECT EVIDENCE, IT IS NOT FAIR OR JUSTIFIABLE TO ESTIMATE THE UNDISCLOSED INCOME MERELY ON AN ESTIMATION. TH EREFORE, FOR THIS VIEW, WE ALSO DRAW SUPPORT FROM AN ORDER OF ITAT JO DHPUR BENCH IN THE CASE OF VIMAL RAJ SAGHVI REPORTED AS 104 TTJ 321 & SURESH VYAS 113 TTJ 337 (JD.) AS NOTED ABOVE, SAME VIEW HAS ALSO BE EN TAKEN BY RESPECTED CO-ORDINATE BENCH ITAT AHMEDABAD BENCH C: IN THE CASE OF SHRI NAGINBHAI C.PATEL VS. ACIT BEARING ITA NO.3 056 TO 3062/AHD/2007 FOR ASSESSMENT YEARS 1998-99 TO 2004- 05, ORDER DATED 04/01/2008,( SUPRA) WHEREIN IT WAS HELD, AS NOTED H EREINABOVE, THAT THE ASSESSING OFFICER SHOULD HAVE INVESTIGATED THE MATT ER FURTHER AND SHOULD HAVE BROUGHT ON RECORD CLINCHING EVIDENCE TO SHOW THAT THE DRAWINGS SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENSE WAS NOT SUFFICIENT AND THAT THERE WERE EVIDENCES TO ESTABLISH THAT SOME EXPENDI TURE WERE IN FACT INCURRED BEYOND THE DISCLOSED AMOUNTS OF EXPENDITUR E. IN THE ABSENCE OF ANY SUCH EVIDENCE, IN OUR CONSIDERED OPINION, THE A DDITIONS MADE CANNOT BE SUSTAINED IN LAW. FOLLOWING THIS DECISION, TH IS GROUND IS ALLOWED. 7.) GROUND NOS. 7, 9, 13, 14, 16, 18, 19 & 21; REPRODUCED BELOW: GR.7 . THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.64,895/- ON ACCOUNT OF INVESTMENT IN SHARES/DEBENTURES. GR.9. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,00,800/- ON ACCOUNT OF HOUSEHOLD ARTICLES . IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 15 - GR.13 . THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.45,000/- ON ACCOUNT OF LOAN TO BROTHER. GR.14 . THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS. 68,677/- ON ACCOUNT OF INVESTMENT IN PLOT AT KERALA. GR.16. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.42,290/- IN RESPECT OF FDR NO.186/96-97 & 197/96-97 OF THE CHITTUR SERVICE CO- OP. BANK LTD., KERALA. GR.18 . THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS.10,324/- ON ACCOUNT OF AMOUNT DEPOSITED AND INTEREST RECEIVED WITH CHITTUR SERVICE CO-OP.BANK LTD. NO.18, KERALA A/C NO.1811. GR.19 . THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION OF RS. 44,211/- IN RESPECT OF AMOUNT DEPOSITED WITH SOUTH INDIAN BANK, BARODA, A/C NO.87 4. GR.21. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,19,991/- IN RESPECT OF ACCOUNT WITH UNION BANK OF INDIA, SAYAJIGUNJ, BARODA, A/C.N O.10562 . 7.1) . IN ALL THESE GROUNDS, ONE OF THE BASIC CONTENTION OF LD.A.R. MS. SHODHAN IS THAT A TELESCOPING IS REQUIRED SINCE THE ASSESSEE WAS EARNING SALARY INCOME, THEREFORE, SURPLUS SAVINGS AS DEMONS TRATED FROM CASH FLOW STATEMENT SHOULD BE SET OFF AGAINST THE IMPUGNED IN VESTMENTS AS ALLEGED IN THESE GROUNDS. ALL THE AMOUNTS EITHER REPRESENT THE INVESTMENT OR THE EXPENDITURE WHICH WAS STATED TO BE OUT OF THE SURPL US FUNDS AVAILABLE WITH THE ASSESSEE. A PLEA WAS RAISED BEFORE THE FIR ST APPELLATE AUTHORITY, AS NOTED VIDE PARA 7.1, THAT THE CASH FLOW STATEMEN T HAS TO BE CONSIDERED IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 16 - SHOWING ACTUAL FUNDS AVAILABLE FOR EXPENSES OR INVE STMENT. IT WAS ALSO POINTED OUT THAT THE A.O. HAD ERRED IN REDUCING THE STANDARD DEDUCTION U/S 16(I) WHILE CALCULATING THE BALANCE AVAILABLE O UT OF THE SALARY INCOME. EVEN AT THIS JUNCTURE WE HEREBY HOLD THAT THE SAID CONTENTION OF THE ASSESSEE DESERVES ACCEPTANCE, BECAUSE FOR THE PURPO SE OF CALCULATION OF AVAILABILITY OF ACTUAL CASH THERE IS NO JUSTIFICATI ON OF REDUCING A NOTIONAL DEDUCTION I.E STANDARD DEDUCTION. 7.2) BEFORE LD. CIT (A) A STATEMENT SHOWING ACTUAL FU NDS AVAILABLE FOR EXPENSES WAS FURNISHED. AS PER THAT STATEMENT THE S ALARY, FOR THE PERIOD 1991 92 UP TO THE LAST MONTH( 31.7.2000) WHEN THE SEARCH WAS CONDUCTED, HAD BEEN TAKEN INTO ACCOUNT AFTER REDUCI NG FROM THE GROSS SALARY THE FIGURES OF TAX, PF, LIP, TDS AS PER THE FOLLOWING CHART :- 7.1 DURING THE COURSE OF APPELLATE PROCEEDINGS THE COUNSELS STATED THAT THE ASSESSING OFFICER ADDED RS.64,043/- ON ACCOUNT OF HOUSEHOLD E XPENSES MET OUT BY THE APPELLANT OF HIS UNDISCLOSED INCOME. IT IS ARGUED THAT THE ASSES SING OFFICER HAS CALCULATED THE SAVINGS AVAILABLE WITH THE APPELLANT FROM HIS SALARY INCOME DURING THE BLOCK PERIOD DEDUCTING FROM GROSS SALARY ALL THE STATUTORY DEDUCTIONS. IT IS CO NTENDED THAT THE AO HAS ERRED IN CALCULATING THE BALANCE SAVINGS FROM SALARY INCOME BY DEDUCTING STANDARD DEDUCTION U/S. 16(I) WHICH IS A STATUTORY DEDUCTION AND THE CASH F LOW HAS TO BE CONSIDERED TAKING SALARY RECEIVED BY THE APPELLANT AFTER DEDUCTION OF OTHER MONETARY BENEFITS. A STATEMENT SHOWING ACTUAL FUNDS AVAILABLE FOR EXPENSES HAS BEEN FURNIS HED (WHICH IS REPRODUCED HEREIN BELOW) AND IT IS ARGUED THAT AS PER THE CHART, THE NET SA VINGS AVAILABLE AFTER MEETING HOUSEHOLD EXPENSES FOR INVESTMENT WAS RS.5,55,103 AND NOT RS. 2,33,422/- AS COMPUTED BY THE AO IN PARA 5.1 OF THE ASSESSMENT ORDER. IT IS ALSO STA TED THAT SINCE THERE WAS NO NEGATIVE CASH FLOW DURING THE ASSESSMENT YEARS 1991-92 TO 19 97-98, THE ADDITION OF RS.64,043/- MADE BY THE AO ON ACCOUNT OF HOUSEHOLD EXPENSES FRO M THE UNDISCLOSED INCOME IS UN JUSTIFIED. A.Y. GROSS SALARY ACTUAL CASH FLOW NET SAVINGS TAX ON EMP NSC/ MEDICL AIM PF PPF LIP BON DS TDS IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 17 - RS. RS. RS. RS. RS. RS. RS. RS. RS. 1991-92 75745 240 19000 4668 6500 4808 0 2300 38,229 1992-93 72085 240 12500 5242 6000 4740 0 3175 40,188 1993-94 79425 240 0 5820 2000 4740 0 2963 45,662 1994-95 84875 240 0 5820 20000 4740 0 3435 50,640 1995-96 89326 240 0 7008 15000 4740 0 3500 58,838 1996-97 12101 240 0 8612 40000 4740 0 7070 60,379 1997-98 16251 240 1068 10584 45000 4740 0 19660 81,659 1998-99 29849 960 0 19038 38000 4740 100 00 44250 1,81,451 1999-00 26255 960 0 19536 36000 4540 100 00 32500 1,59,049 2000-01 273340 960 0 20261 40000 4540 100 00 39285 1,58,294 1.4.2000 31.7.200 0 * 105705 320 0 9523 6667 2600 0 10096 7 6,499 168234 9,50,888 *THE SALARY FOR BROKEN PERIOD 1.4.2000 TO 31.7.2000 IS CALCULATED PROPORTIONALLY ON THE BASIS OF SIX MONTHS SALARY. 7.3) FROM THE SAID CALCULATION IT IS EVIDENT THAT THE NET SALARY SAVINGS WERE STATED TO BE RS. 9,50,888/-. FROM THESE SAVING S THE ASSESSEE HAS THEREAFTER REDUCED THE ANNUAL HOUSE-HOLD EXPENSES T O ARRIVE AT THE BALANCE FIGURE OF AVAILABLE CASH OF RS. 5,55,103 AS PER THE FOLLOWING CALCULATION :- 7.2. THE LEARNED COUNSEL FOR THE APPELLANT ALSO SUB MITTED A STATEMENT SHOWING NET SAVINGS AVAILABLE FOR INVESTMENTS WHICH IS REPRODUC ED AS UNDER:- A.Y. FUNDS AVAILABLE FOR EXPENSES AS COMPUTED ABOVE. HOUSEHOLD EXP. NET SAVINGS AVAILABLE FOR INVESTMENT. 1991-92 38,229.00 27,469.00 10,760.00 1992-93 40,188.00 22,928.00 17,260.00 1993-94 45,662.00 25,902.00 19,760.00 1994-95 50,640.00 20,880.00 29,760.00 IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 18 - 1995-96 58,838.00 27,078.00 31,760.00 1996-97 60,379.00 30,619.00 29,760.00 1997-98 81,659.00 31,889.00 49,770.00 1998-99 1,81,451.00 43,261.00 1,38,190.00 1999-2000 1,59,049.00 60,009.00 99,040.00 2000-01 1,58,294.00 59,254.00 99,040.00 1.4.00 -17.8.01 76,499.00 46,496.00 30, 003.00 9,50,888.00 3,95,785.00 5,55,103.00 7.4) AS AGAINST THAT THE A.O. HAD CALCULATED THE SUR PLUS OF SALARY SAVINGS AT RS.2,33,422/- NATURALLY AFTER REDUCING T HE AMOUNT OF HOUSE HOLD EXPENSES AS DETERMINED BY HIM. IN OUR OPINION, AFTER HEARING BOTH THE SIDES, THAT ONCE WE HAVE TAKEN A DECISION A DEC ISION IN THIS ORDER THAT IN THE ABSENCE OF ANY INCRIMINATING OR CLINCHING EV IDENCE IN RESPECT OF THE HOUSE-HOLD EXPENSES THE EXPENSES AS SHOWN BY TH E ASSESSEE HAS TO BE ACCEPTED. THEREFORE THE COROLLARY OF THIS VIEW IS T HAT THE CALCULATION OF THE A.O. FOR THE PURPOSE OF AVAILABILITY OF CASH FU NDS HAS TO BE MODIFIED. ON THE OTHER HAND THE CALCULATION OF THE ASSESSEE I S TO BE EXAMINED IN THE LIGHT OF OUR OVER ALL DECISION. WE ORDER ACCORDINGL Y. 7.5) AS FAR THESE GROUNDS ARE CONCERNED THE ASSESSE ES ONLY PLEA IS TO ALLOW THE TELESCOPING AGAINST THE FUNDS AVAILABLE A S PER THE FUND-FLOW STATEMENT. CONSIDERING THE TOTALITY OF THE CIRCUMST ANCES WE HEREBY DO NOT DISTURB THE QUANTUM AS AGITATED IN THESE GROUNDS BU T DIRECT TO ALLOW THE TELESCOPING AGAINST FUND AVAILABLE AS TO BE DETERMI NED ACCORDING TO OUR DIRECTIONS HEREINABOVE. TO BE MORE EXPLICIT, THE AS SESSEE HAD MADE A CALCULATION OF AVAILABILITY OF FUNDS AT RS. 5,55,19 5/-AND IF THE IT IS FOUND CORRECT AND IN ACCORDANCE TO OUR OBSERVATION THEN T O THAT EXTENT THE SET- OFF CAN BE GRANTED. WE HEREBY DIRECT ACCORDINGLY. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 19 - 7.6) A CONNECTED PLEA HAS ALSO BEEN RAISED THAT THE A.O. HAD ADOPTED BOTH THE ITEMS I.E. THE UNDISCLOSED INCOME AND THE UNDISCLOSED EXPENDITURE/ INVESTMENT AND MADE THE HUGE ADDITION IN SUCH CASES WHERE AFTER SEARCH UNDISCLOSED INCOME HAS BEEN FOUND TOGE THER WITH THE UNDISCLOSED ASSETS/ EXPENDITURE THEN IT IS AN ACCEP TED PROPOSITION THAT THE UNDISCLOSED INCOME OUGHT TO BEEN UTILIZED IN ACQUIR ING THE UNDISCLOSED ASSETS. FOR THIS ARGUMENT RELIANCE IS PLACED ON ACI T VS. BADRIRAM CHAUDHARY 118 TTJ 492 (JD.) THAT BOTH INCOME THEOR Y AND INVESTMENT/EXPENDITURE THEORY CAN NOT BE APPLIED SIMULTANEOUSLY TO DETERMINE THE UNDISCLOSED INCOME. THE ACCOUNTING PR INCIPLE AS PROPOUNDED IS UNIVERSALLY ACCEPTED. THERE IS NO TW O OPINION ABOUT THE SAID ADJUSTMENT. BUT WE HEREBY SUGGEST THAT IN SUCH A SITUATION TWO COLUMNS ARE REQUIRED TO BE MADE, ONE FOR THE UNACCO UNTED INCOME AND THE OTHER FOR THE UNACCOUNTED INVESTMENT/EXPENDITUR E. BOTH THE COLUMNS ARE TO BE MATCHED AND THE HIGHER FIGURE OUT OF THE TWO IS THE UNDISCLOSED AMOUNT FOR THE PURPOSE OF TAX AS PER CHAPTER XIV B OF THE ACT. 8.) FOLLOWING GROUNDS RELATE TO THE GOLD JEWELLERY ADDITIONS : GROUND NO.8 REPRODUCED BELOW: 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.34,718/- ON ACCOUNT OF JEWELLERY WEIGHING 400 GRAMS GROUND NO.11 .: IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 20 - THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.40,000/-& RS.2,70,640/-IN RESPECT OF JEWELLERY WEIGHING 100 GMS AND 676.600 GMS RESPECTIVELY . 8.1.) DURING THE COURSE OF SEARCH, 1887.400 GMS. GOLD ORNAMENTS WERE FOUND FROM THE RESIDENCE AND FROM TWO BANK LOCKERS OF THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THE GOLD BELONGING TO THE FA MILY MEMBERS AS UNDER:- 1. BELONGING TO OTHERS 443.800 GRAMS 2. ACQUIRED OUT OF SAVINGS 400.000 GRAMS 3. ON DIFFERENT OCCASIONS RECEIVED BY WIFE AND CHILDREN 676.600 GRAMS 4. JEWELLERY RECEIVED ON MARRIAGE 350.000 GRAMS 1870.400 GRAMS 8.2) SINCE THE ASSESSEE HAS ALLEGED THAT OUT OF 1887.40 0GMS, 1870.400GMS WAS DULY UNEXPLAINABLE, THEREFORE, THE ASSESSEE HAS ONLY DISCLOSED 17GMS OF GOD ORNAMENTS AS PART OF THE UNDISCLOSED INCOME AS PER THE BLOCK RETURN, WHEREIN THERE WAS A TOTAL DIS CLOSURE OF RS.53 LACS AND FOR THE SAKE OF READY REFERENCE THE BIFURCATION OF THE SAID DISCLOSURE CAN BE REPRODUCED BELOW:- 1. CASH RS.17,26,590 2. JEWELLERY RS. 82,464 3. FDRS RS.13,71,205 4. DEPOSIT WITH LLOYDS BANK DUBAI RS.19,02,271 5. BALANCE WITH DIFFERENT RS. 1,52,120 IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 21 - BANKS TOTAL RS. 53,00,000 8.3) THE ASSESSING OFFICER HAS THEREAFTER DISCUSSED THE EXPLANATION OF THE ASSESSEE PERTAINING TO THE SOURCES OF GOLD ORNA MENTS. 8.4) NOW BEFORE US, THE APPELLANT HAS SAID THAT OUT OF THE TOTAL WEIGHT OF 1887.400 GMS, THE ASSESSEE MUST BE GIVEN THE BENEFIT AS PRESCRIB ED CBDT CIRCULAR NO.1916 DATED 11/05/1994 IN THE FOLLO WING MANNER:- WIFE MRS.ZEENAT ALI 500.00 GMS UNMARRIED DAUGHTER ROZINA ALI 250.00 SON RAIZ ALI 100.00 ASSESSEE MR.LIAKAT ALI 100.00 TOTAL 950.00 8.5 ) WE HEREBY ACCEPT THAT PLEA FOLLOWING CIT(A) VS. RATANLAL VYAPARILAL JAIN 235 CTR 568 (GUJ.) WHEREIN IT WAS HELD THAT THE TRIBUNAL COMMITTED NO LEGAL ERROR IN TREATING THE E XTENT OF JEWELLERY SPECIFIED IN THE SAID CIRCULAR TO BE A REASONABLE Q UANTITY AND IN DELETING THE ADDITION ON THAT BASIS. THE BALANCE THEREFORE L EFT IS 937.400 GMS (1887.400-950). FOR REST OF THE JEWELLERY, THE BENE FIT OF 443.800GMS CLAIMED TO BE THE JEWELLERY OF MOTHER-IN-LAW (DECID ED AS PER GR.NO.10 BELOW) WAS ALSO ASKED TO BE REDUCED FROM THE HANDS OF THE ASSESSEE. MEANING THEREBY THAT OUT OF 1887.400 GMS., THE FOLL OWING TWO ADJUSTMENTS WERE REQUESTED TO BE MADE :- (I) TOTAL QUANTUM OF JEWELLERY FOUND - 1887 .400GMS. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 22 - LESS : BENEFIT OF CBDT CIRCULAR AS PER ABOVE - 950.000 ----------- BALANCE - 937.400 GMS. (II) MOTHER-IN-LAW JEWELLERY ( DISCUSSED HEREIN BE LOW AS PER GRD. NO.10). - 443.800 --------- 493.600GMS. --------- 8.6.) EVEN AFTER THE TWO ADJUSTMENTS, THE BALANCE JEWELL ERY REMAINED TO BE EXPLAINED WAS 493.600 GMS. AS AGAINST THAT THE D ISCLOSURE IS ONLY OF RS.82464 STATED TO BE EQUIVALENT TO THE VALUE OF OR NAMENTS WEIGHING 17GMS. WHETHER THE ASSESSEE HAD SURPLUS FUNDS AVA ILABLE WITH HIM TO PURCHASE THE BALANCE 476.600 GMS OF JEWELLERY (493. 600 17GMS)? SO BY ACCEPTING THE PLEA OF THE ASSESSE EVEN THIS PART OF THE UNEXPLAINED INVESTMENT IN JEWELLERY HAS TO BE SEEN IN THE LIGHT OF THE TOTAL AVAILABILITY OF FUNDS AS PER THE CASH FLOW CHART AND IF THE ASSE SSEE IS ABLE TO DEMONSTRATE THAT THERE WERE SUFFICIENT SURPLUS FUND S WERE AVAILABLE SO AS TO INVEST IN THE JEWELLERY WEIGHING 476.600GMS, THE N THE ASSESSING OFFICER HAS NO OPTION BUT TO ACCEPT THE SAME. WE ACCORDINGLY DIRECT THAT WHILE TELESCOPING THE SURPLUS AVAILABLE FUNDS WITH THE OTHER ASSETS, THEN HE HAS TO EXAMINE WHETHER THIS PART OF THE JEWELLERY CAN ALSO BE ADJUSTED AGAINST THE SAID AVAILABLE FUNDS S TATEMENT. WITH THE RESULT, WE RESTORE THIS GROUND BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE SAME AS PER THE DIRECTIONS. 9.) GROUND NO.10 REPRODUCED BELOW:- IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 23 - 10. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ADDITION OF RS.1,77,520/- FOUND FROM BANK LOCKER AT KERALA. 9.1.) AS EMERGED FROM GROUND NO.8 PG.16 OF CIT (A) ORDER THE ABOVE REFERRED ADDITION PERTAINED TO THE JEWELLERY WEIGHI NG 443.800 GMS FOUND FROM THE BANK LOCKER AT KERALA. THE SEARCH PARTY HA S OPERATED UPON A LOCKER SITUATED AT PALGHAT DISTRICT CO-OPERATIVE BA NK CHITTUR BRANCH. IN THE SAID LOCKER GOLD ORNAMENTS WEIGHING 443.800 GRA MS WERE FOUND. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE GOLD BELONGED TO THE MOTHER-IN-LAW OF THE ASSESSEE NAMELY SMT. SIRAJUNEE SA. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE LOCKER WAS OPERATED BY THE INVESTIGATION TEAM IN THE PRESENCE OF SMT. SIRAJUNE ESA AND IN REPLY TO SEVERAL QUESTIONS SHE HAD AFFIRMED THAT THE ORNAMEN TS BELONGED TO HER WHICH WERE RECEIVED WAY BACK THIRTY YEARS AT THE TI ME OF HER MARRIAGE. HOWEVER, THE ASSESSING OFFICER HAS IGNORED THE SAID STATEMENT AND HELD THAT SINCE THE GOLD ORNAMENTS WERE FOUND IN POSSESS ION OF THE ASSESSEE BECAUSE THE LOCKER WAS IN THE NAME OF THE APPELLANT AND HIS WIFE SMT. ZEENAT ALI, THEREFORE, IN THE ABSENCE OF ANY POSITI VE EVIDENCE THAT THE GOLD IN FACT HAD BELONGED TO MOTHER-IN-LAW THE SAID PLEA WAS REJECTED. AN AMOUNT OF RS.1,77,520/- BEING UNDISCLOSED INCOME OF THE BLOCK PERIOD TOWARDS INVESTMENT IN 443.800 GMS. GOLD WAS TAXED. 9.2.) THE FIRST APPELLATE AUTHORITY HAS AFFIRMED THE SAM E. PRIMARILY ASSIGNING THE REASON THAT THE JEWELLERY WAS FOUND I N A LOCKER WHICH IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 24 - BELONGED TO THE ASSESSEE, THEREFORE, THE ASSESSEE W AS THE OWNER OF THE ORNAMENTS. 9.3.) WITH THIS BRIEF BACKGROUND, WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. THE ONLY QUESTION IS THAT WHETHER THERE WAS ANY PROBABILITY THAT A LO CKER WHICH WAS SITUATED AT FAR OF PLACE, ASSESSEE BEING RESIDENT OF VADODAR A AND LOCKER BEING SITUATED AT CHITTUR, KERALA, THE CONTENTS THEREIN W ERE ONE OF THE RELATIVE OR MERELY BECAUSE THE LOCKER IS IN THE NAME OF THE ASS ESSEE, THE CONTENTS FOUND THEREIN BELONGED TO THE ASSESSEE. IF WE ANSW ER THIS QUESTION ON HUMAN BEHAVIOUR AND PREPONDERANCE OF PROBABILITIES, THEN THE EXPLANATION OFFERED BY THE ASSESSEE MUST NOT BE RUL ED OUT ALTOGETHER. FROM THE SIDE OF THE ASSESSEE THE FORCEFUL OR CONCR ETE EVIDENCE WAS THE PRESENCE OF THE MOTHER-IN-LAW AT THE TIME WHEN THE INVESTIGATION WING HAS OPENED THE SAID LOCKER AND ON DUE VERIFICATION OF THE ORNAMENTS, THE INVESTIGATION WING HAS FOUND IT PROPER NOT TO SEIZE THE GOLD ORNAMENTS. THEREAFTER, THOSE GOLD ORNAMENTS WERE HANDED OVER T O THE LADY. THERE IS ONE MORE SUBSTANTIVE ASSERTION IN SUPPORT OF THE AS SESSEE I.E. THE AFFIDAVIT OF MOTHER-IN-LAW WHEREIN SHE HAS AFFIRMED THAT THE IMPUGNED JEWELLERY IN FACT BELONGED TO HER. HER AFFIDAVIT CANNOT BE RULED OUT PRIMARILY BECAUSE OF THE REASON THAT HER STATEMENT HAS ALSO BEEN RECORDED U/S. 132 (4) OF THE I.T. ACT, 1961 PLACED ON RECORD ON PAGE NO.36 OF THE COMPILATION DATED 20/09/2000 WHEREIN VIDE QUESTION NO.3 SHE HAS AFFIRMED THAT THE ORNAMENTS FOUND IN THE LOCKER HAD BELONGED TO HER WHICH HAVE ALSO BEEN IDENTIFIED BY HER. SHE HAS AF FIRMED THAT THE ORNAMENTS WERE RECEIVED 30 YEARS BACK AT THE TIME O F HER MARRIAGE. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 25 - THROUGH HER AFFIDAVIT PLACED ON PAGE 147 OF THE COM PILATION SHE HAS IDENTIFIED THE ORNAMENTS AND KEPT ON REPEATING THAT THOSE ORNAMENTS HAVE BEEN KEPT BY HER IN THE SAID LOCKER AND PURPOS ELY OPENED BY HER DAUGHTER JOINTLY WITH HER HUSBAND FOR THE SAFETY PU RPOSE SINCE SHE DOES NOT HAVE ANY OTHER LOCKER OF HER OWN. 9.4.) WITH THIS BACKGROUND WE HAVE TO EXAMINE FIRSTLY, T HE EXISTENCE OF PROBABILITIES AND SECONDLY THE IMPORTANCE OF THE AF FIDAVIT IN THE ABSENCE OF ANY OTHER DIRECT EVIDENCE. AS FAR AS THE QUEST ION OF HUMAN PROBABILITIES ARE CONCERNED, A STRONG POSSIBILITY CANNOT BE DENIED THAT A DAUGHTER MIGHT HAVE THOUGHT IT PROPER TO OPEN A LOC KER AT A PLACE WHERE HER MOTHER RESIDES FOR THE SAFE DEPOSIT OF GOLD ORN AMENTS. OTHERWISE IT DOES NOT MAKE ANY SENSE THAT WHY THIS ASSESSEE WHIL E STAYING AT VADODARA WAS HAVING A LOCKER AT CHITTUR KERALA WHER EIN EXCEPT GOLD ORNAMENTS NO OTHER INCRIMINATING MATERIAL WAS DETEC TED. ORDINARILY AN AFFIDAVIT IS NOTHING BUT A SELF-SERVING DOCUMENT BU T IF THE DEPONENT HAS BEEN CROSS-EXAMINED, THEN SUCH AN AFFIDAVIT CANNOT BE THROWN OUT AT THE THRESHOLD ON THE GROUND OF SELF-SERVING DOCUMENT. HERE, IN THE PRESENT CASE, THE STATEMENT RECORDED THEN AND THERE U/S.132(4) OF THE I.T. ACT, 1961 HAS CORRELATION WITH THE SAID AFFIDAVIT, THERE FORE, SUCH AN AFFIDAVIT HAS EVIDENTIARY VALUE. WE DRAW SUPPORT FR OM MEHTA PARIKH & CO. 30 ITR 181 (S.C.) & SOHAN LAL GUPTA 33 ITR 786 (ALL.) IN A SITUATION, WHERE AN ASSET IS CLAIMED TO BE V ERY OLD PRIZE POSSESSION OF A LADY, I.E. 30 YEARS IN THE PRESENT APPEAL, BEING RECEIVED AT THE TIME OF HER MARRIAGE, IT WAS NOT BE EXPECTED T O FURNISH A DIRECT EVIDENCE, RATHER IT WOULD BE UNFAIR TO CALL FOR THE PURCHASE BILLS/VOUCHERS IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 26 - OF THAT OLD GOLD ORNAMENTS. IN SUCH A SITUATION AN AFFIDAVIT IS A PROBABLE EVIDENCE SO AS TO SUBSTANTIATE THE CLAIM. EVEN IF WE ANALISE THIS PROBLEM IN THE LIGHT OF THE PROVISIONS OF SECTION 132(4A) O F THE I.T. ACT, 1961, WHEREIN THE ACT PROVIDES THAT WHERE ANY MONEY, BUL LION, JEWELLERY, IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH JEWELLERY, ETC. BELONGS TO SUCH PERSON. HOWEVER, THIS ACCEPTED POSITION OF LAW IS THAT SUCH PRESUMPTION IS A REBUTTABLE PRESUMPTION . IN THE PRESENT CASE, IT COULD ONLY BE REBUTTED BY AN AFFIDAVIT BECAUSE ONE OF AN IMPORTANT CIRCUMS TANTIAL EVENT THAT HAPPENED ON THE DAY WHEN THE LOCKER WAS OPENED IN T HE PRESENCE OF THE INVESTIGATION WING AT CHITTUR AND THAT POINT OF TIM E THE MOTHER-IN-LAW HAS IDENTIFIED THOSE JEWELLERY ARTICLES. THUS, WE CAN HOLD THAT THE JEWELLERY HAD IN FACT BELONGED TO MOTHER-IN-LAW SMT . SIRAJUNEESA, HENCE, NOT TO BE ADDED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. THIS GROUND IS HEREBY ALLOWED. 10.) GROUND NO.12 REPRODUCED BELOW:- 12. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ADDITION OF RS.4,90,850/- & RS.3,00, 000/- ON ACCOUNT OF INVESTMENT IN RESIDENTIAL HOUSE PROPERTY . 10.1. THE OBSERVATION OF THE ASSESSING OFFICER IN THE IM PUGNED ASSESSMENT ORDER WAS THAT THE ASSESSEE WAS STAYING AT 302, HEMPTON SQUARE, FATEHGUNJ, BARODA. THE SAID FLAT WAS PURCH ASED FROM DHRUV DEVELOPERS FOR A SUM OF RS.4,40,000/-. AFTER INCL UDING REGISTRATION CHARGES & DOCUMENTATION CHARGES, ETC., THE TOTAL IN VESTMENT WAS SAID TO BE RS.4,90,850/-. THE ASSESSING OFFICER HAS ALSO REPRODUCED THE DATE- IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 27 - WISE PAYMENT FOR PURCHASE OF FLAT WHICH WAS UNDISPU TEDLY THROUGH CHEQUE STARTING FROM THE YEAR 1995 AND ENDING IN TH E YEAR 1997 OF RS.4,40,000/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SAID INVESTMENT. THE EXPLANATION WAS THAT THE ASSESSEE WAS EARLIER STAYING AT 78B, RUXMANINAGAR, NEW SAMA ROAD, BARODA. IT WAS EXPLAINED THAT THE SAID FLAT WAS SOLD FOR A SUM OF RS.4,50,000/- AND T HOSE SALE PROCEEDS OF THE OLD FLAT WERE INVESTED TOWARDS PURCHASE OF THE NEW FLAT. THERE IS A REFERENCE OF SEIZED PAPER MARKED AS ANNEXURE-A AT P AGE NO.15 STATED TO BE AN AGREEMENT MADE BY THE ASSESSEE FOR SALE OF RU XMANINAGAR FLAT TO ONE SHRI K.K. ANIRUDH ON 25/06/1997. IT WAS NOTED BY THE ASSESSING OFFICER THAT AT THE TIME OF AGREEMENT A PAYMENT OF RS.1,50,000/- WAS MADE BY THE PURCHASER TO THE ASSESSEE. IT HAS ALSO BEEN NOTED THAT THE BALANCE AMOUNT WAS TO BE PAID WITHIN SIX MONTHS FRO M THE DATE OF AGREEMENT. THE ASSESSEE WAS ASKED TO GIVE DATE-WI SE DETAILS OF THE SALE PROCEEDS RECEIVED BY HIM, HOWEVER, AS PER ASSESSING OFFICER THE ASSESSEE HAD FAILED TO FURNISH THE EVIDENCE. IT WAS PRECIS ELY ASKED THAT HOW THE SALE PROCEEDS WERE INVESTED IN THE SAID FLAT BECAUS E THE SALE WAS SUBSEQUENT TO THE DATES ON WHICH THE PURCHASE AMOUN T WAS INVESTED. AS PER ASSESSING OFFICER, SINCE THE ASSESSEE HAS FAILE D TO DISCLOSE THE SOURCE OF THE AMOUNTS DEPOSITED IN UNION BANK OF INDIA ON SEVERAL DATES TILL 15 TH FEBRUARY-1997 FOR MAKING THE TOTAL PAYMENT FOR RS. 4,40,000/- FOR PURCHASE OF NEW FLAT, HENCE, THE ENTIRE INVESTMENT ON RS.4,90,850/- WAS HELD AS UNEXPLAINED INVESTMENT IN RESIDENTIAL FLAT. 10.2.) THE FIRST APPELLATE AUTHORITY HAS ALSO AFFIRMED TH E ASSESSING OFFICERS VIEW PRIMARILY ON THE GROUND THAT THE OLD PROPERTY WAS SOLD IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 28 - SUBSEQUENT TO THE INVESTMENTS MADE TOWARDS PURCHASE OF NEW PROPERTY. IT WAS ALLEGED THAT THE ASSESSEE HAS NOT PRODUCED A NY EVIDENCE TO PROVE THAT CERTAIN AMOUNT WAS RECEIVED PRIOR TO THE AGREE MENT WHICH WAS CLAIMED TO HAVE BEEN INVESTED FOR PURCHASE OF NEW F LAT. NOW BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE HAS CONTESTED THAT THE DOCUMENT WHICH WAS FOUND AT THE TIME OF SEARCH WAS NOTHING BUT A DUMB DOCUMENT. LD A.R. HAS ALSO CONTESTED THAT THE REVENUE HAS NOT FOUND ANY INCRIMINATING MATERIAL TO DEMONSTRATE THA T THE ASSESSEE HAD OTHER SOURCES OF INCOME EXCEPT THE SALARY INCOME TO MAKE ALLEGED UNEXPLAINED INVESTMENT IN THE FLAT. SO SHE HAS QUI PPED THAT SINCE THE ONLY SOURCE LEFT WITH THE ASSESSEE WAS THE SALE PRO CEEDS OF THE OLD FLAT, THEREFORE, THE EXPLANATION AS OFFERED SHOULD BE ACC EPTED. 10.3) ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTA TIVE PLACED THE RELIANCE ON THE FINDINGS OF THE AUTHORITIES BEL OW. ON HEARING BOTH THE SIDES WE ARE OF THE OPINION THAT ONE HAS TO APPRECI ATE THE SEIZED MATERIAL AND THE INFORMATION GATHERED AT THE TIME WHEN THE S EARCH WAS CONDUCTED. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT AN I NVESTMENT OF RS.4,40,000/- WAS MADE TOWARDS PURCHASE OF A FLAT A T VADODARA. IT HAS ALSO BEEN NOTICED THAT AN OLD FLAT WAS SOLD. THE A PPELLANT HAS TRIED TO EXPLAIN THAT THE SALE PROCEEDS OF THE OLD FLAT WERE IN FACT DIVERTED TOWARDS PURCHASE OF NEW FLAT. HOWEVER, A PAPER WAS FOUND D URING THE COURSE OF SEARCH, I.E. AN AGREEMENT FOR SALE OF OLD FLAT DATE D 25/06/1997. ON ONE HAND, THE SALE AGREEMENT WAS UNDISPUTEDLY OF JUNE-1997 BUT ON THE OTHER HAND, THE MOST DAMAGING PART FOR THE ASSESSEE WAS THAT THE ENTIRE PAYMENT OF RS.4,40,000/-, WHICH WAS MADE BY CHEQUE WAS UP TILL IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 29 - 15/02/1997. THE ASSESSEE WAS UNABLE TO ESTABLISH A NEXUS BETW EEN THE SALE-DATES AND THE DATES OF PURCHASE. IT WAS THE PRIMARY ONUS OF THE TO FULLY SUBSTANTIATE THE SOURCES OF INVESTMENT WHICH WAS MADE IN INSTALLMENTS STARTING FROM 08/05/1995 AND ENDING ON 15/02/1997. CONTRARY TO THIS, THE REVENUE HAS A STRONG CASE BEC AUSE OF THE DISCLOSURE OF AN AGREEMENT WITH SHRI K.K. ANIRUDH WHICH WAS UN DISPUTEDLY OF THE SUBSEQUENT DATE, I.E. 25/06/1997. NO EVIDENCE EVE N AFTER THE SEARCH WAS FURNISHED TO DEMONSTRATE THAT THE SALE PROCEEDS OF THE OLD PROPERTY WERE DIVERTED FOR THE PURCHASE OF THE NEW PROPERTY. THE REFORE, WE ARE OF THE VIEW THAT ONCE SUBSEQUENT UPON A SEARCH TWO DOCUMEN TS; ONE IN RESPECT OF THE SALE AND THE OTHER IN RESPECT OF THE PURCHAS E WERE FOUND AND THE DATES OF THOSE TWO WERE NOT MATCHING WITH EACH OTHE R, THEREFORE, PRIMA FACIE IT COULD NOT BE LINKED WITH EACH OTHER. IN THE ABSENCE OF ANY DIRECT LINK OR NEXUS WITH THE DATES OF PURCHASE AND DATES OF SALES, PARTICULARLY WHEN THE PURCHASE HAS HAPPENED PRIOR TO THE DATE O F SALE, THEN THE SAID ASSERTIONS OF THE ASSESSEE HAS NO SUBSTANCE, THEREF ORE, DISMISSED. THIS PART OF THE GROUND IS DISALLOWED. 10.4) THIS GROUND NO. 12 HAS ONE MORE COMPONENT ABOUT AN ADDITION OF RS.3 LACS. IN THIS REGARD, THE OBSERVATION OF THE ASSESSING OFFICER WAS BASED UPON A LOOSE-PAPER MARKED AS ANNS URE A/2 AT PAGE NO.68 DISCUSSED VIDE PARA 11.2; REPRODUCED BELOW:- 11.2. DURING SEARCH OPERATION LOOSE-PAPERS AS PER ANNEXURE A/2 WERE SEIZED. PAGE NO.68 RELATES TO PAYMENT MA DE FOR PURCHASE OF PROPERTY UNDER REFERENCE. DURING SEAR CH OPERATION A STATEMENT U/S.132(4) OF THE ACT OF THE ASSESSEE WAS RECORDED ON IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 30 - 17/08/2000. IN THE SAID STATEMENT, VIDE QUESTION NO.11, ON PAGE NO.6 OF STATEMENT, THE ASSESSEE WAS ASKED TO EXPLAI N PAGE NO.68 SHOWS CERTAIN CALCULATIONS. PLEASE EXPLAIN THE CO NTENTS?. IN RESPONSE TO SAID QUESTION, THE ASSESSEE HAS CLEARLY STATED THESE CALCULATIONS PERTAIN TO PURCHASE OF MY RESIDENTIAL PREMISES. HERE 3,91,500/- WAS PAID BY CHEQUE, RS.16,500/- AS STAMP & WRITING CHARGES & RS.3,00,000/- PAID AS ON MONEY IN CASH. THE PAYMENT OF RS.3,00,000/- MADE IN CASH AS ON MONEY IS NOTH ING BUT UNACCOUNTED INVESTMENT MADE BY THE ASSESSEE IN THE HOUSE PROPERTY. THE ASSESSEE WAS, THEREFORE, VIDE THIS OFFICE LET TER DATED 15-05-2002 ASKED TO EXPLAIN AS TO WHY THE SAME SHOU LD NOT BE TREATED AS UNEXPLAINED INVESTMENT MADE BY HIM OUT O F HIS INCOME FROM UNDISCLOSED SOURCES OF THE BLOCK PERIOD. THE A.R. OF THE ASSESSEE HAS VIDE HIS SUBMISSION DATED 27-05-2002 S UBMITTED IN THIS RESPECT AS PER HIS LETTER DATED 6-10-2000 ADDR ESSED TO INVESTIGATION WING ASSESSEE HAS CLARIFIED THE FACTS THAT THE FIGURES NOTED ON THIS PAPER WERE PROPOSED COST OF ACQUISITI ON AS PER DISCUSSION AND INFORMATION FROM THE BUILDER. THE S AID TRANSACTION DID NOT MATERIALIZE AND AS A RESULT NO PROPERTY WAS ACQUIRED. THE SUBMISSION OF THE AR OF THE A IS NOT ACCEPTABL E FOR THE REASONS THAT THE ASSESSEE HAS CLEARLY ACCEPTED IN HIS STATE MENT RECORDED U/S.132(4) AS MENTIONED ABOVE THAT IN PURCHASE OF F LAT NO.302 AT HEMPTON SQUARE HE HAS MADE PAYMENT OF ON MONEY OF RS.3,00,000/- IN CASH. DURING ASSESSMENT PROCEEDIN GS THE ASSESSEE HAS NOT ATTENDED IN PERSON AS HE IS OUT OF INDIA BUT SHRI VINODBHAI J AMIN, A.R. AND POWER OF ATTORNEY HOLDER HAS ATTENDED THE PROCEEDINGS. HE HAS NOT PRODUCED ANY OTHER EVIDENCE IN SUPPORT OF HIS SUBMISSION. UNDER THE C IRCUMSTANCES, PAYMENT OF RS.3,00,000/- MADE AS ON MONEY IS TR4EAT ED AS CASH PAID IN PURCHASE OF HOUSE PROPERTY OUT OF HIS INCOM E FROM UNDISCLOSED SOURCES OF THE BLOCK PERIOD. 10.5) . SINCE THE ASSESSEES STATEMENT WAS RECORDED U/S.1 32(4) OF THE I.T. ACT, 1961 WHEREIN HE HAS ACCEPTED THE PAYMENT OF ON-MONEY IN CASH OF RS.3 LACS, THEREFORE, UNDER THOSE CIRCUMSTANCES, THE ASSESSING OFFICER IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 31 - HAS HELD THAT IT WAS NOTHING BUT AN UNDISCLOSED INC OME OF THE ASSESSEE OF THE BLOCK PERIOD. 10.6.) THE LEARNED CIT(APPEALS) HAS AFFIRMED THE ASSESSIN G OFFICERS VIEW FOR THE BASIC REASON THAT THE APPELLANT HAD AC CEPTED THE PAYMENT OF 'ON-MONEY' TO M/S. DHRUV DEVELOPERS AS PER THE ST ATEMENT RECORDED U/S.132(4) OF THE I.T. ACT, 1961. 10.7) ON HEARING THE RIVAL SUBMISSIONS, ONCE A LOOSE-PAP ER WAS FOUND I.E. PAGE NO.68 OF THE SEIZED MATERIAL, PERTAINED T O THE PURCHASE OF RESIDENTIAL PREMISES AND THROUGH WHICH IT WAS FOUND THAT THERE WAS A MENTION OF 'ON-MONEY' IN CASH OF RS.3 LACS THEN IT IS JUSTIFIABLE ON THE PART OF THE REVENUE DEPARTMENT TO READ A DOCUMENT A S IT WAS FOUND AT THE TIME OF THE SEARCH. THEREFORE, WE UPHOLD THE SAID APPROACH OF THE REVENUE DEPARTMENT FIRST BECAUSE A DIRECT EVIDENCE WAS DETECTED AND SECONDLY BECAUSE OF THE REASON THAT THE ASSESSEE HA S AFFIRMED THE SAME AT THE TIME OF THE STATEMENT RECORDED U/S.132 (4) OF T HE I.T. ACT, 1961. IN THE ABSENCE OF ANY CONTRARY EVIDENCE, FROM THE SIDE OF THE ASSESSEE, WE HEREBY AFFIRM THIS ADDITION AS WELL. WITH THE RESULT, THIS GROUND NO.12 IS DISMISSED. 11.) GROUND NO.15. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION OF RS.33,555/- IN RESPECT OF FDR NO. 89/9 6-97 OF CHITTUR SERVICE CO-OP BANK LTD. KERALA. IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 32 - 11.1) THE ONLY ISSUE IS THAT THE FDR IN QUESTION WAS NOT FOUND DURING THE COURSE OF SEARCH, BUT IT WAS LATER ON FO UND DURING THE COURSE OF ENQUIRY CONDUCTED AFTER THE SEARCH. SO QU ESTION WAS THAT WHETHER THE SAID FDR BE HELD AS UNDISCLOSED INCOME DETECTED DURING THE COURSE OF SEARCH? FACTS HAVE REVEALED TH AT THE INVESTIGATION WING OF VADODARA HAVE CALLED THE DE TAILS OF DIFFERENT BANKS. ONE OF THE BANK, I.E. CHITTUR SERVICE CO-OP ERATIVE BANK HAS FURNISHED COPY OF ACCOUNTS OF THE ASSESSEE AND FAMI LY MEMBERS. ON THE BASIS OF SAID INFORMATION THE FDRS CAME TO THE NOTICE OF THE ASSESSING OFFICER AND HELD AS UNEXPLAINED INVESTMEN T OF THE ASSESSEE. THE FIRST APPELLATE AUTHORITY HAS AFFIRM ED THE ACTION OF THE ASSESSING OFFICER. AFTER HEARING BOTH THE SIDES W E ARE OF THE VIEW THAT THE ISSUE IS COVERED BY TWO DECISIONS; NAMELY MORARJEE GOKULDAS SPG. & WVG.CO.LTD. VS. DCIT REPORTED AS 9 5 ITD PAGE 1 (MUM.)(TM); & VIMAL RAJ SINGHVI 104 TTJ 321 ( JODH.) AS FOUND FROM THE FACTS OF THE CASE, A GENERAL INQU IRY WAS MADE BY THE INVESTIGATION WING VADODARA AND THE INFORMATION GATHERED FROM THAT INQUIRY WAS PASSED OVER TO THE ASSESSING OFFIC ER CONCERNED, WHO HAS TREATED THAT INFORMATION AS UNDISCLOSED INV ESTMENT OF THE ASSESSEE. THEREFORE, THE ADMITTED FACTUAL POSITION IS THAT THE SAID UNDISCLOSED INCOME IN THE SHAPE OF FDR WAS NOT PHYS ICALLY FOUND AT THE TIME OF SEARCH. ON MERITS, THE ASSESSEE HAS T RIED TO EXPLAIN THE SOURCE OF INVESTMENT BUT ON THE LEGAL ASPECT THE AB OVE CITED DECISION SUPPORTS THE CONTENTION OF LEARNED AUTHORISED REPRE SENTATIVE OF THE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 33 - ASSESSEE. THE LEGAL PROPOSITION LAID DOWN WAS THAT THE ASSESSMENT AS PER CHAPTER XIVB IS IN ADDITION TO THE REGULAR ASSESSMENT AND NOT IN SUBSTITUTION OF THE REGULAR ASSESSMENT. ME ANING THEREBY THE ENQUIRY CONDUCTED AFTER THE SEARCH BEING A ROUTINE INVESTIGATION THE RESULT OF THE SAME COULD NOT BE SAID TO BE THE INCR IMINATING MATERIAL GATHERED AT THE TIME OF SEARCH. WITH THE RESULT, T HE IMPUGNED AMOUNT CANNOT BE SAID TO BE THE PART OF THE UNDISCL OSED INCOME FOR THE PURPOSE OF ASSESSMENT UNDER CHAPTER XIVB OF THE I.T. ACT, 1961. THE ADDITION IS HEREBY DELETED. 12.) GROUND NO. 17: - THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ADDITION OF RS. 29,392/- IN RESPECT OF BANK ACCOUNT NO. 3173 WITH STATE BANK OF INDIA, BARODA IN THE NA ME OF SMT. ZEENAT ALIWIFE OF THE ASSESSEE. 12.1) THERE IS A REFERENCE OF AN ACCOUNT WITH SBI, VA DODARA A/C.NO.3173 IN THE NAME OF MRS. ZEENAT ALI. THERE WAS A CREDIT BALANCE OF RS.29,392/- OUTSTANDING IN THE SAID ACCO UNT. THOUGH THE AMOUNT WAS IN THE NAME OF THE WIFE BUT ACCORDING TO ASSESSING OFFICER SHE HAD NO SOURCE OF INCOME, THEREFORE, THE AMOUNT IN QUESTION WAS HELD AS UNDISCLOSED INCOME OF THE ASSE SSEE. THE FIRST APPELLATE AUTHORITY HAS AFFIRMED THE SAID ADDITION ON THE GROUND THAT IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 34 - ONCE THE WIFE OF THE APPELLANT HAD STATED AS PER ST ATEMENT U/S.132(4) OF THE I.T. ACT, 1961 AT THE TIME OF SEARCH, THAT S HE HAD NO SOURCE OF INCOME, THEREFORE, THE AMOUNT IN QUESTION WAS RIGHT LY ADDED BACK BY THE ASSESSING OFFICER. HOWEVER, THE ARGUMENTS OF BO TH THE SIDES AND THE CASE RECORDS HAVE REVEALED THAT NO SPECIFIC ANS WER WAS GIVEN ABOUT THE SOURCE OF SAID DEPOSITS WHICH WERE ON DIF FERENT DATES AS LISTED BY THE ASSESSING OFFICER. IN THE ABSENCE OF A DIRECT EVIDENCE THAT THE IMPUGNED SMALL AMOUNT WAS OUT OF THE UNDIS CLOSED INCOME OF THE ASSESEE IT IS UNJUSTIFIABLE TO HOLD MERELY O N PRESUMPTION THAT THE SAID INVESTMENT WAS MADE BY THE ASSESSEE. REF. VIMAL RAJ SINGHVI 104 TTJ 321 ( JODH.); & KAILASHBEN MANHARLA L CHOKSHI 328 ITR 411 (GUJ) WE ARE OF THE VIEW THAT THE ACTION OF THE ASSESSING OFFICER DESERVES TO BE REVERSED. CONSIDER ING THE TOTALITY OF THE CIRCUMSTANCES THIS GROUND BEING TRIFLE IN NA TURE IS HEREBY ALLOWED. 13.) GROUND NO.20 : - THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 4,01,727/- IN RESPECT OF ACCOUNT W ITH INDIAN BANK, WADAKARAPATI BRANCH , A/C NO. 4506. 13.1) DURING THE COURSE OF SEARCH, IT WAS FOUND THAT TH E ASSESSEE HAD 14 BANK ACCOUNTS IN DIFFERENT BANKS. THOSE ACC OUNTS WERE EITHER IN ASSESSEES OWN NAME OR IN JOINT NAMES WIT H THE FAMILY IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 35 - MEMBERS. COPIES OF BANK ACCOUNTS HAVE BEEN CALLED F ROM THE RESPECTIVE BANKS. THE ASSESSEE WAS ASKED TO EXPLAIN THE CREDITS AS AP PEARING IN THOSE ACCOUNTS. IN RESPECT OF THE BANK ACCOUNT IN QUEST ION, I.E. INDIAN BANK WADAKARAPALI BRANCH ACCOUNT NO.4056, THE SAME WAS STATED TO BE IN THE NAME OF THE ASSESSEE AND SMT. Z EENAT ALI . THE ASSESSING OFFICER HAS REPRODUCED IN THE ASSESSM ENT ORDER, THE RELEVANT CREDIT ENTRIES AS APPEARING IN THE SAID AC COUNT. THE ASSESSEE WAS GIVEN OPPORTUNITY, HOWEVER, ON ONE PRETEXT OR THE OTHER THE EXPLANATION ABOUT THE SOURCE OF THE CREDIT ENTRIES COULD NOT BE FURNISHED. SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE S OURCE OF THE DEPOSIT, THEREFORE, THE TOTAL OF THE CREDITS AM OUNTING TO RS.4,01,494/- WAS TAXED AS UNDISCLOSED INCOME FOR T HE BLOCK PERIOD. WHEN THE MATTER HAD GONE BEFORE THE FIRST APPELLATE AUTHORITY, A LEGAL ARGUMENT WAS RAISED THAT THE ASSESSING OFFICER HAD ACTED OUTSIDE HIS JURISDICTION BECAUSE THE SAID ADDITION WAS MADE AFT ER AN ENQUIRY MADE DURING THE COURSE OF PROCEEDINGS. IT WAS CONT ENDED THAT ENQUIRIES WERE CONDUCTED AND DETAILS WERE GATHERED AFTER THE SEARCH HENCE, IT COULD NOT SAID TO BE AN INCRIMINATING MAT ERIAL FOUND AT THE TIME OF SEARCH. HOWEVER ALL THOSE ARGUMENTS WERE R EFUTED PRIMARILY ON THE GROUND THAT SUCH A MATERIAL WHICH WAS GATHER ED DURING THE COURSE OF THE SEARCH WAS THE BANK ACCOUNTS HENCE IT WAS NOTHING BUT THE INCRIMINATING MATERIAL AND MERELY ITS ENTRIES WERE ASKED TO EXPLAIN AFTER THE SEARCH THEREFORE HAD TO BE HELD A S PART OF THE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 36 - PROCEEDINGS OF THE BLOCK ASSESSMENT. WITH THE RESU LT, THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED. 13.2) WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED T HE MATERIAL PLACED BEFORE US. ONCE THE ADMITTED POSITION IS T HAT DURING THE COURSE OF SEARCH, AS MANY AS 14 BANK ACCOUNTS HAVE BEEN DETECTED, THEN THE ONLY CONSEQUENCE WAS TO ENQUIRE ABOUT THOS E BANK ACCOUNTS AND, THEREFORE, ENQUIRING ABOUT THOSE ACCOUNTS HAS NOT VITIATED THE LEGAL PROCEEDINGS AT ALL. THE ASSESSEE HAS NOT EX PLAINED THE SOURCE OF DEPOSITS; THEREFORE, THE ASSESSING OFFICER HAD T O TAX THOSE DEPOSITS AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. AS FAR AS THE QUESTION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF N.R. PAPER AND BOARD LTD. VS. DCIT REPORTED AS (199 8) 234 ITR 733 (GUJ.) I S CONCERNED, THE VERDICT IS ABSOLUTELY CLEAR WHILE DEALING WITH THE SCOPE AND APPLICABILITY OF CHAPTER XIV-B OF THE I.T. ACT, 1961 THAT IN BLOCK ASSESSMENT THE ENQUIRY IS TO BE CONDUCTED TO SNIFF OUT WHAT HAD REMAINED HIDDEN. THE PURPOSE SHOULD BE THAT TO DETECT THE AMOUNT WHICH WOULD NOT HAVE BEEN OTHERWISE DISCLOSED BY THE ASSESSEE AND IT WAS UNEA RTHED CONSEQUENCE UPON THE SEARCH. THEREFORE, THE SPECI AL PROVISION OF CHAPTER XIV-B OF THE I.T. ACT, 1961 ARE ADVISED TO OPERATE IN THE SEPARATE FIELD OF UNDISCLOSED INCOME AND ARE CLEARL Y IN ADDITION TO THE REGULAR ASSESSMENTS. THE OTHER CASE LAWS CITED DURING THE APPEAL PROCEEDINGS BEFORE THE LEARNED CIT (APPEALS) HAVE A LSO EXPRESSED THE SAME VIEW. RELIANCE PLACED BY THE ASSESSEE DO NOT HELP AND IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 37 - THEREFORE THOSE ARGUMENTS HAVE NO MERITS BEING NOT IDENTICAL ON THE FACTS OF THE PRESENT CASE, THEREFORE, THIS GROUND I S HEREBY DISMISSED, HOWEVER THE GENERAL PLEA OF TELESCOPING IS HEREBY A CCEPTED , THEREFORE DIRECT ACCORDINGLY. 14.) GROUND NO.22 : THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ALLOWING GENUINE DEDUCTION AVAILABLE U/S 80L OF THE ACT AGAINST VARIOUS ADDITIONS IN RESPECT OF INTEREST FROM BANK. 14.1 THE INTEREST INCOME EARNED ON FDRS WAS TAXED IN THE HANDS OF THE ASSESSEE AS UNDISCLOSED INCOME. THE ISSUE R AISED THROUGH THIS GROUND IS THAT WHETHER THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S.80L OF THE I.T. ACT, 1961 IN RESPECT OF THE SAI D INTEREST INCOME WHILE COMPUTING THE INCOME AS PER CHAPTER XIV-B OF THE I.T. ACT, 1961 FOR THE BLOCK PERIOD. BOTH THE REVENUE AUTHOR ITEIS HAVE HELD THAT THE SAID DEDUCTION COULD NOT BE ALLOWED TO THE ASSESSEE WHILE MAKING THE ADDITION IN THE BLOCK ASSESSMENT ORDER. AFTER HEARING BOTH THE SIDES WE ARE OF TH E VIEW THAT ON ACCOUNT OF THE AMENDMENT IN THE PROVISIONS OF CHAP TER XIV-B, THE DEDUCTIONS AS PRESCRIBED IN THE ACT ARE TO BE ALLOW ED AS HELD IN THE CASE O CIT VS. SUMAN PAPER BOARDS LTD. REPORTED AS (2009) 314 ITR 119 (GUJ.) FOLLOWING THE LEGAL PROPOSITION LAID DOWN THAT IN VIEW OF THE PROVISIONS OF SEC. 158BB, AS AMENDED BY THE FINANCE ACT 2002, RETROSPECTIVELY W.E.F. 1 ST JULY 1995, NO FAULT CAN BE FOUND WITH THE IMPUGNED ORDER OF THE TRIBUNAL HOLDI NG THAT THE IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 38 - ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SEC. 80-I OR 80IA IN BLOCK ASSESSMENT. FOLLOWING THIS DECISION, WE HEREBY DIRECT TO ALLOW THE CLAIM. THIS GROUND IS ALLOWED. 15) GROUND NO.23:- THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT GIVING RELIEF IN RESPECT OF DEPOSIT WITH LLOYDS BANK DUBAI UAE WRONGLY DECLARED BY US AS UNDISCLOSED INCOME. 15.1) IN RESPECT OF THIS GROUND, NO SERIOUS ARGUMENT HA S BEEN ADVANCED PRIMARILY BECAUSE OF THE REASON THAT THE AMOUNT DEPOSITED IN THE LLOYDS BANK DUBAI WAS ALLEGED TO BE OUT OF THE GIFTS RECEIVED FROM FRIENDS AND RELATIVES BUT THAT CLAIM WAS NOT PROPERLY SUBSTANTIATED. SINCE THE REVENUE AUTHORI TIES HAVE TAXED THE SAID AMOUNT IN THE ABSENCE OF PROPER SUPPORTING EVIDENCE AND NOW EVEN BEFORE US, THE ASSESSEE IS UNABLE TO IMPRO VE HIS CASE, THEREFORE, THE VIEW TAKEN BY THE REVENUE AUTHORITIE S IS HEREBY AFFIRMED. THEREFORE, THIS GROUND IS DISMISSED . 16. IN THE RESULT THIS APPEAL IS PARTLY ALLOW ED AS PER ABOVE TERMS. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11 - 3 - 2011. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11 / 3/ 2011 IT(SS)A NO.78/AH D/2004 SHRI GULAM MOHAMMED LIAKAT ALI VS. DCIT BLOCK PERIOD 01.04.1990 TO 17.08.2000 - 39 - T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS)-V, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD